Personal Finance

Changes to international banking regulations are likely to flow through to big changes in savings rates for Australian investors.

The international regulations are aimed at bring more stability to the banking system by encouraging banks to build longer term, rather than shorter term, deposits.

We’re already seeing term deposit rates matching at-call rates and that’s likely to continue.

It is an important change for those investors who need income from the investments to fund their lifestyle.

“We’re expecting to see financial institutions bring back notice accounts, which were popular in the 1980s and 1990s,” predicts Michelle Hutchison from research group Ratecity.com.au.

“Notice accounts are similar to other savings accounts as they have variable interest rates but you must give a certain notice period if you want to withdraw money. For instance, if you have a 31-day notice account you must give 31 days’ notice before you can access your savings.

“We also expect to see greater competition for term deposits over 31 days and financial institutions are likely to lift interest rates to attract longer-term capital. This should see the value of term deposits overtake at-call savings accounts.”