Chasing the deposit dollar
The increase and availability of wholesale funding dilemma is causing major headaches for banks, but investors long cash are reaping the benefits with some term rates passing eight per cent, more than a full percentage point higher than the official rate.
Twelve-month terms are generally providing the highest deposit rates across financial institutions, due to the difficulty in pricing multiple year deposits with the directional uncertainty of interest rates.
Macquarie Private Wealth clients with $10,000 to deposit will receive 8.31 per cent for one year, with the ING Direct 8.1 per cent, and RaboPlus five points lower at 8.05 per cent.
Two of the big four banks are offering market competitive yields with Commonwealth Bank the price leader at 7.8 per cent and ANZ close behind at 7.75 per cent.
Investing $10,000 at National will pay 6.2 per cent, with Westpac offering an unhappy 4.5 per cent.
An aggressive move has been made for at-call deposit market share by Members Equity Bank, increasing the ME Online Savings Account 80 points in February to a market leading 7.5 per cent.
International banks are chasing the Australian dollar more actively than our own banks, offering superior rates.
The Scottish-owned BankWest account TeleNet Saver 12 month introductory rate is 7.5 per cent, with the Dutch RaboBank online RaboPlus account offering 7.15 per cent and the ING flagship Savings Maximiser 6.65 per cent.
The National iSaver offers 6.8 per cent, the Commonwealth NetBank Saver 6.75 per cent, with the tiered Westpac Max-i Direct highest rate 6.75 per cent for funds exceeding $250,000.
Lower rates have not diminished the power of the big banks to increase their deposit books, with APRA household deposit statistics since June 2007 showing growth in this section of their deposit book portfolio, up by between 8.5 per cent for Westpac to 11.8 per cent for National.
Commonwealth deposits are double any other bank at $87.7 billion and increased 10.9 per cent since June, with Westpac increasing 8.5 per cent.
January deposits were up around one per cent for the four majors.
BankWest household deposits increased only 10.7 per cent since June from a much smaller base than the Australian majors, which is below the 11 per cent system, with ING up 14 per cent.
New entrant RaboBank more than doubled household deposits since June, with deposits only $802 million.
Deposit rates were sourced from InfoChoice. An earlier version of this article appeared in Friday's Weekly Banking Bulletin.