Australians saved an extra $35 billion in July, marking the highest monthly increase in household deposits on record.
The latest APRA Monthly Authorised Deposit-taking Institution Statistics show total household deposits now stand at a record $1.64 trillion.
“Australians are proving that a good savings habit can withstand the pressures of rising household bills, with money in the bank hitting a new record high of $1.64 trillion,” said Sally Tindall (pictured), Canstar.com.au data insights director.
“Money back from tax returns is likely to be a key contributor to the super-sized boost in July, with total household deposits rising by an astronomical $35 billion in the space of a month.”
This record savings boost coincides with improving wellbeing and lower financial stress. While stress has eased overall, mortgage and rent costs still weigh on younger Australians, and many households remain cautious about savings, according to NAB.
Despite the surge in savings, ongoing interest rates for savers continue to fall. MOVE Bank recently cut its highest ongoing savings rate from 5% to 4.75%, leaving Westpac as the only bank still offering a 5% ongoing rate – but only for customers aged 18 to 29.
“While Australians are still focused on increasing their cash reserves, unfortunately, most savers have been forced to watch their interest rates drop on the back of the three cash rate cuts this year,” Tindall said.
“As a result, there’s just one lone bank still offering an ongoing rate starting with a ‘5’, but it’s only available if you’re under 30 and willing to jump through a few hoops. For many savers, rates now cap out in the mid-4s at best.”
The total value of housing loans among all ADIs reached a new record high of $2.35 trillion in July, up $8 billion for the month and $129 billion over the past year. CBA led the big four, growing its residential mortgage book by $2.2 billion in July and $34.5 billion year-on-year.
“On the mortgage front, lower rates are enticing more borrowers through the door, helping banks grow their home loan books at a steady rate,” Tindall said. “Once again, CBA recorded the biggest monthly rise among the big four banks in its residential mortgage book, increasing by $2.2 billion in the space of a month, spurred on by two cash rate cuts.
“CBA and Westpac are offering a relatively competitive variable rate of 5.34%, in an effort to consolidate their lead. This puts these rates from the two major banks in the lowest one fifth of all variable rates on our database.
“That said, smaller lenders are keeping the pressure on, offering advertised variable rates below 5.25% and as low as 4.89%, giving owner-occupiers plenty of options if they’re willing to look outside the big four.”
For mortgage brokers, record household savings and easing financial stress are fueling strong competition in the home loan market, even as living costs and housing pressures persist for many. Brokers can help clients navigate a wide range of rates and products, including competitive offers from both major banks and smaller lenders, as optimism about future rate cuts and property prices continues to build.
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