Home loan interest rates hike faster than savings account rates

Banks may have some favouritism regarding which interest rates they hike, according to the latest analysis from Mozo.

Between July and November 2023, the Reserve Bank of Australia lifted interest rates by 0.25%. However, in the Mozo database, the average interest rates for home loans and savings accounts grew by vastly different amounts.

Home loan interest rates for owner-occupiers and investors rose by nearly 0.50% regardless of repayment type (P&I or IO). This could be the culmination of both the June and November rate hikes flowing through to customers.

However, introductory rates for savings account holders only rose by 0.22% – under half the rate of home loan growth. Ongoing savings rates just lifted 0.15%.

Why hasn’t my savings interest rate gone up?

Every time the RBA raises the cash rate, it’s supposed to tighten the economy by making spending on assets, like home loans , more expensive, while deposits become more attractive. But if this is the logic, why is there a gap between how much savings accounts and mortgage rates have increased?

The reality is that banks and lending institutions have no obligation to pass along any rate hikes. The cash rate affects their operating costs, so banks usually raise profitable interest rates – like mortgage rates – to help cover their losses. Lifting deposit rates is a way of retaining customers.

However, if your home loan interest rate has lifted a lot, but your savings accounts aren’t improving, it may be time to search for a better option. This is especially true if your savings aren’t in an offset account – a type of savings account that saves interest on your home loan.

A quick look into Mozo’s database reveals the best mortgage rates are under 6%, and the best savings rates are over 5%. Finding a good place to park your money can make all the difference in a time of high living costs .

Compare high-interest savings accounts in the table below.