Australian banks are wasting no time hiking mortgage interest rates following the latest central bank increase, but they are dragging their feet when it comes to rewarding savers. While homeowners see their monthly payments climb almost instantly, banks are being much more selective and slow to raise the interest they pay on savings accounts.

A data insights director from the comparison site Canstar explains that banks are playing a "wait and see" game. Instead of hiking rates across the board, they are watching what their competitors do and gauging how customers react before making any moves on savings products.

There are clear financial motives behind this delay. By keeping savings rates low while mortgage costs rise, banks can widen their profit margins and strengthen their balance sheets. To manage public perception, many banks use "bonus-interest" accounts. These products are often complex and filled with fine print, requiring customers to meet strict monthly conditions to earn a competitive rate.

The country's major banks are currently reviewing their savings strategies with a focus on specific markets. For example, one major lender recently boosted the rate on its youth savings account while leaving its standard base rate unchanged. This strategic approach allows banks to appear competitive in small niches while keeping their overall interest costs low.