Sign of end to the war over deposit rates
Interest rates on a range of savings accounts are falling faster than the official rate, suggesting some banks are offering less of a premium for household deposits.
Savers have benefited in recent years from relatively high rates on term deposits and online savings accounts, as banks fought to get a bigger share of their funding from households. But there are now signs the "war for deposits" is easing.
According to the comparison service RateCity, seven institutions this month cut rates on a range of products by between 0.3 and 0.5 percentage points, more than the Reserve Bank's 0.25 percentage point cut in the official rate, suggesting competition to attract funds is less fierce.
ME Bank cut its online saving product by 0.35 percentage points to 3.15 per cent, Bankwest cut its rates on one of its savings accounts 0.5 percentage points to 5 per cent and Heritage Bank cut its rates for deposits between $100,000 and $250,000 by 0.35 percentage points.
ME Bank chief executive Jamie McPhee said the bank did not have access to the cheaper sources of funding available to major banks but its rates remained higher than those offered by the big four.
"When making interest rate decisions ME Bank always seeks to balance two important objectives: maintaining a fair level of earnings for the not-for-profit industry super funds and their members who own ME Bank, and providing genuinely fairer interest rates to all our customers - both depositors and borrowers," he said.
A spokesman for Bankwest said it had cut rates for the product in question after keeping rates unchanged in December. "The Regular Saver product is still very competitively priced and the deposits market remains competitive," he said.
A Heritage spokesman said the bank was bringing a "very good" rate into line with other products.
However, RateCity spokeswoman Michelle Hutchison said the reductions spelt "the end of unusually high savings account rates and less competition for savings accounts".
Households had $592.5 billion on deposit with the nation's banks at the end of March but bankers think that lower interest rates may tempt more people to shift their savings to other assets.