The Biking Broker Newsletter - 11th February 2010

Banks in Battle for Deposit Cash

There is some fierce competition going on between lenders in the deposit market and consumers are the big winners.

The battle for customer deposits is heating up, meaning good news for savers.

An industry-wide shift has caused lenders to price deposits well above the Reserve Bank’s cash rate in a bid to secure retail funding instead of costly wholesale capital.

Australia’s $1.3 trillion deposit market became a relatively cheap funding source for the banks as the cost of wholesale funding spiked during the credit crisis.

Analysis of the regulator’s monthly banking statistics shows NAB controls $77.8 billion in household deposits, ANZ $55.7 billion, CBA $50.3 billion and Westpac $44.7 billion at the end of October 2009.

With $25,000 in a term-deposit (TD) account for 12 months, some banks are offering a rate of 6.8 per cent. The frequency of the interest payments becomes more and more significant with longer term deposits.

If you’re after a good rate on a term-deposit The Biking Broker can access TD rates with NAB better than what you’ll get if you go into a branch.

For the 60 per cent of Australians who don’t have a mortgage, there’s never been a better time to be a saver.  For the first time, online savings accounts are offering interest rates above the standard variable mortgage rate.

In a report today (11/2/10) The Sunrise tv show on Seven, rated bank’s online saving accounts, with Bankwest offering the highest at call rate of 5.62%. Higher rates are available with conditions on minimum monthly deposits or balances.

In conjunction with a current special from Bankwest with no application fees on its Mortgage Shredder Loan (usually $700), this makes it a good time to pair your lending needs with your saving needs at Bankwest. Call or email the Biking Broker today for more details.