Westpac slashes deposit rates

Westpac has reduced interest rates on two of its savings products by 100 basis points.

St George Bank, ME Bank and Bank of Queensland have also cut their savings rates.

The changes took effect last Tuesday, when Westpac cut the maximum rate on its online savings account, eSaver, from six to five per cent. It also cut the bonus rate on its Reward Saver accounts (of which there are also children's, youth and student versions) from 6.2 to 5.2 per cent.

Then, on Friday, St George cut the introductory rate on its Direct Saver account, from 6.15 to 5.15 per cent (the introductory rate applies for four months after a new account is opened and then reverts to the base rate of 4.6 per cent).

St George also cut the bonus rate on its Incentive Saver account, from 6.2 to 5.2 per cent.

At the end of September ME Bank cut the rate on its First Home Saver account by 75 basis points, from 6.25 to 5.5 per cent.

And Bank of Queensland has cut the introductory rate on its WebSavings account from 6.25 to 6.05 per cent. The introductory rate applies to all new accounts until January 31 next year, after which the base rate (currently 4.1 per cent) applies.

Infochoice financial services analyst David Lalich said Westpac's rate change positions its online savings account 100 basis points below its big bank rivals. ANZ Online Saver, Commonwealth NetBank Saver and NAB iSaver all have six per cent introductory rates.

Lalich said term deposit rates have been coming down over the past couple of months and online savings account rates could be next.

The market lending rates remain unchanged - Virgin Money's Virgin Saver at 6.75 per cent for four months; UBank's USaver at 6.51 per cent, with a minimum deposit requirement, and Citibank's Citibank Online Saver at 6.45 per cent for six months.