Australian savers can now earn more than 6 per cent on cash, a level last seen around late 2011. Ubank lifted its introductory rate to 6.25 per cent for new customers on Friday, and ING matched it with a four-month introductory offer. That is a genuine shift for anyone sitting on a deposit. It also forces a sharper question for investors: what does property have to deliver to beat a return that needs no tenant, no agent and no repairs?
How high are savings rates Australia wide, really?
The headline number is real, but it comes with conditions. According to Canstar’s analysis, the surge is being driven by smaller regional and digital lenders chasing deposits.
Key numbers
- Ubank introductory rate: 6.25 per cent, for new customers who add at least $1 each month
- Top ongoing rate on the day: 6 per cent, on youth accounts from BOQ and Newcastle Permanent, each with monthly conditions
- Best unconditional account for all adults: 5.5 per cent from AMP, capped at $50,000
- Base rates at several lenders: as low as 0.01 per cent if conditions are missed
In plain English, 6 per cent is the ceiling, not the typical outcome. Introductory deals roll off after a few months. Age-restricted accounts exclude many investors. Caps limit how much of a deposit can earn the top rate. A saver who slips on a monthly condition can end up earning close to nothing.
The largest banks have lifted their bonus rates too, but more modestly. Westpac’s young adult product reached 5.95 per cent and ANZ Plus 5.35 per cent, while two other major banks stopped at 5.25 per cent.
Cash versus a rental property: the comparison that matters
The sharpest way to frame this is cash return against net rental yield plus expected capital growth. Gross yields are the figure most listings quote. Net yield is what is left after rates, insurance, management fees, maintenance and vacancy. For many investors that net number sits well below the gross figure, and it is the right one to compare against a deposit rate.
So the cash return and the property return are not measuring the same thing. A deposit pays interest and returns your capital intact. A property pays net rent, then adds or subtracts capital growth, and it is usually geared, so losses and gains are magnified.
Here is the rule of thumb. If net yield plus realistic annual growth does not clearly exceed what cash pays after tax, you are being asked to take on extra risk for no extra expected reward. Interest income is taxed at your marginal rate, so the after-tax gap matters too. Run the numbers for your own situation rather than leaning on averages.
Why the argument for waiting has more weight than a year ago
Commentary on this event has split along predictable lines. One side treats a 6 per cent deposit rate as a reason to hold off, since cash now pays a solid return with no market exposure. The other side argues that high deposit rates are temporary, that rate cuts would erode them, and that sitting out risks missing the next growth phase.
Both have a point. Cash is a strong parking spot while you build a deposit or wait for clearer pricing. But promotional rates can disappear faster than a property cycle turns. Locking in a 6 per cent introductory offer does not lock in 6 per cent for the year.
The argument for waiting is strongest where yields are thin and the local market is soft. It is weakest where rents are rising fast, supply is tight and net yields already compete with cash.
What high deposit rates mean for first-home buyers
This is where the windfall is most concrete. Ubank’s research suggests first-home buyers are leaning into the trend, including a 19-year-old Sydney student saving $100 to $200 a month toward a deposit. The youth-targeted accounts paying around 6 per cent are doing real work for people building deposits from small, regular contributions.
There is a trade-off. A higher return on savings helps you accumulate a deposit faster, but it does not lower the price of the home you are saving for. If prices rise faster than your deposit grows, you can still fall behind. Our look at home ownership affordability covers why that gap keeps widening for many households. A strong cash rate softens the problem; it does not solve it.
Questions to settle before moving money either way
Before committing capital to cash or property, work through a short list:
- What is the rate after the introductory period ends, and what happens if you miss a condition?
- What is the net yield on the property you are considering, after all holding costs?
- What capital growth are you assuming, and what happens to your cashflow if it is zero for two years?
- How much of your deposit would sit above any account cap?
- Could you hold the property through a rate rise without selling?
If you are weighing up gearing against equity you already hold, read about the risk hidden in using home equity to invest. And if cash buffers are thin, a simple cashflow test is worth doing first.
The practical take
A 6 per cent savings rate is a useful reset for the cash-versus-property comparison, but it is conditional, often temporary and capped. Use it as a benchmark: any property purchase should clear it on a net, after-tax basis with a margin for risk. If it does not, waiting while earning a decent return is a reasonable position, not a cop-out.
Start here: pick one property you are tracking, calculate its net yield, and compare it to the best unconditional rate you can actually access.
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General info, not financial advice.
