Savings interest rates hit 6 per cent for the first time in a decade: ‘Unbeatable’

Savings rates have hit 6 per cent for the first time in more than a decade. Interest rates are at a 12-year high and while that’s bad news for borrowers struggling with higher mortgage repayments, it means savers are being offered much more attractive rates to stash their cash.

The Mutual Bank has launched a new special 6 per cent interest rate for its Internet Saver product. The product comes with a tiered interest rate system, with the top 6 per cent rate available for balances between $50,000 and $100,000 until the end of January 2025.

Mozo personal finance expert Rachel Wastell told Yahoo Finance this marked the first time since August 2013 that a savings rate had hit the 6 per cent mark.

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“In a market where most banks are trimming rates, this bold move really stands out,” Wastell said.

“It’s interesting they’ve chosen to launch such a high rate when market expectations lean towards cuts later this year or early next.”

Commonwealth Bank economists are predicting the Reserve Bank of Australia (RBA) could cut interest rates as soon as December this year, shifting this back from November, while other economists and markets are forecasting a February 2025 rate cut.

The Mutual Bank’s special 6 per cent interest rate is only available until January 31, 2025, after that, it will revert to a 4.5 per cent base rate.

Wastell said the offer could allow savers to make the most of the current high-interest rate environment before the RBA starts cutting rates.

“This tiered rate system seems like a strategic move by The Mutual Bank to attract larger deposits quickly, boosting their balance sheet without committing to such a high base rate long-term,” she said.

High savings rate with ‘no strings attached’

Banks like ING, ubank and ME are currently offering 5.50 per cent savings rates on their online savings accounts for balances up to $100,000. However, these are bonus rates meaning savers have to jump through a few hoops to secure them.

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If meeting conditions like growing your balance or avoiding withdrawals is a challenge, Wastell said The Mutual Bank’s offer could be worth considering.

“If you’ve got the cash ready and can park it there until January, 6 per cent is currently unbeatable in terms of a ‘no strings’ savings account —especially as other rate leaders have been trimming savings rates and the highest term deposit rate is only 5.15 per cent per annum for an 11-month term,” Wastell told Yahoo Finance.

Wastell encouraged savers to consider their goals, flexibility and ability to meet any bonus conditions associated with other high-interest savings accounts.

“For some, that extra half a per cent might be worth it; for others, the stability of consistent returns might feel like a safer bet,” she said.

Westpac, ANZ cut savings rates

It comes as major banks Westpac and ANZ make unwelcome tweaks to their online savings account interest rates.

Westpac cut the base rate of its Life account by 0.15 to 1.85 per cent on Friday, while hiking the bonus rate by the same 0.15 to 3.15 per cent. The bonus rate is only payable when you grow your balance each month and make a deposit.

ANZ similarly reduced the base rate of its Online Saver by 0.10 to 1.40 per cent, while increasing its three-month introductory rate by 0.10 to 2.25 per cent. That means new customers only get the higher rate for a couple of months, while existing customers will get the rate cut.

Wastell said savers should be prepared for more changes to rates in the “near future” as we edge closer to the RBA cutting interest rates.

The RBA is expected to hold the cash rate steady at 4.35 per cent tomorrow.

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