Term Deposits

Summary: Big four cut term deposit rates, Bank of Sydney hikes. Commbank, Westpac, and ANZ all cut top term deposit rates this week, but Bank of Sydney went against the grain to launch a six month rate near the 5% p.a. mark.

There’s less than a week until the April monetary policy decision. With 92% of the market expecting the RBA to leave rates unchanged, there’s little suggestion the outlook for the term deposit market will change substantially any time soon. Even before the February decision, TD returns were decreasing, and that downward trajectory has only accelerated since the cash rate cut.

This week saw the majors trim back rates further; there are now no term deposit rates above 4.50% p.a. at any of the big four banks. Seasoned observers will note the biggest banks have tended towards uncompetitive rates compared to heavy hitters like Judo or Heartland Bank in recent times.

The reality now is, even with these cuts, the gap to the summit of the market has shrunk. Rates beginning with a ‘5’ are all but gone, with the top rate at Heartland Bank – which pledges to offer ‘best in kind’ products – now 4.95% p.a. (for nine month terms).

If you’re interested in a fixed term investment, your earning potential has decreased significantly compared to the back end of last year. But, given the market still could have a way to fall, it might still be wise to act sooner rather than later.

However, there were a couple shining light among the rate movers from the week past. Bank of Sydney took its six month product (which some may remember briefly hit 5.50% p.a. in 2023) back up to 4.85% p.a., on the shoulder of the market leaders, while Great Southern Bank also hid a hike in amongst its cuts.

But let’s check the other latest market movements over the last weeks.  

• Commonwealth Bank cuts rates by up to 10bps.
• Westpac Group cuts special offer rates. Australia’s second biggest bank also cut back its top term deposit rate to 4.50% p.a. this week. That top rate applies on its 11 month special offer for existing customers only, on deposits starting at $1,000. This rate also applies at Westpac subsidiaries St George, BankSA and Bank of Melbourne.
• ANZ cuts rates by up to 20bps. ANZ matched CommBank and Westpac stride-for-stride, dropping its top rate to 4.50% p.a. This rate applies to eight month terms and only on the ‘Advance Notice’ product, which requires at least 31 days’ notice of withdrawing funds before the term finishes.
• Bank of Sydney hike six month rates 15bps. Positive news for term deposit enthusiasts has been hard to come by in recent times, but Bank of Sydney delivered this week. Its new six month rate is now 4.85% p.a., – just 0.05% below that of Judo Bank, which currently offers the highest six month rate in our database.

Other rate movers

• Gateway Bank cut nine month rates by 0.05% to a new top rate of 4.75% p.a.
• Great Southern Bank cut most of its products, but hiked four month rates by 185 bps to a new top rate of 4.70% p.a..

Exhibit 1: Best Term Deposit Rates(12-month) 

Term deposit rates by Institution

Institution	1 m nom	2 m nom	3 m nom	4 m nom	5 m nom	6 m nom	9 m nom	1 Year	2 Year	3 Year	4 Year	5 Year
ANZ	1.25	1.45	3.00	3.15	3.25?	3.40	3.60	4.00?	3.75	3.10	3.10	3.10
Commonwealth Bank	1.25	1.50	3.00	3.15	3.25?	3.30?	3.60	3.60	3.75	3.50	3.50	3.50
NAB	1.25	1.45	3.00	3.15	3.25	3.40	3.60	4.00	3.80	2.90	2.90	2.90
Westpac	1.25	1.45	3.00	3.15	3.25	3.40	3.75	4.00	3.80	3.40	3.40	3.40
Military Bank			3.50	3.50	3.50	4.30	4.30	4.65	4.50	4.60
AMP Bank	0.10	0.20	4.60	4.45	4.45	4.50	4.40	4.35	4.00	3.00	3.00	3.00
Arab Bank Australia	1.25	1.25	4.15	4.00	4.00	4.70	4.40	4.20	3.75	3.65	3.65	3.55
Bank of Melbourne	1.25	1.45	3.00	3.15	3.25	3.40	3.75	4.00	3.30	3.30	3.30	3.30
Bank Australia			4.45			4.70	4.55	4.45	4.25	4.00
BankSA	1.25	1.45	3.00	3.15	3.25	3.35	3.70	3.95	3.95	3.25	3.25	3.25
Bankwest	2.00	2.00	3.75	3.00	4.75	4.25	4.00	4.50	3.90	3.80	3.80	3.80
Bank of Sydney	1.25	1.50	3.25	4.80	3.50	3.50	3.70	4.00
BankVic			3.60	4.00	3.70	4.70	3.70	4.50	4.00	4.00	4.00	4.00
Beyond Bank			4.55			4.40	4.35	4.30	3.70	3.60	3.60	3.60
Bendigo Bank	1.25	1.50	3.20	3.70	3.80	4.10	4.20	4.00	3.25	3.30	3.30	3.30
BOQ	0.75	0.80	2.25	4.55	1.25	4.65	4.60	4.50	4.50	3.30	3.30
BOQ Specialist			4.60	4.65		4.75	4.70	4.50	4.30	3.50	3.50	3.50
Great Southern Bank	1.30	1.60	4.50?	4.80?	4.50?	4.70	4.40?	4.40?	3.80?	3.60	3.60	3.60
Defence Bank			4.00			3.60	3.70	4.20	4.00
Greater Bank	1.00	1.00	4.00	4.00	4.00	4.65	4.00	4.45	4.00	4.00	4.00	4.00
Heritage Bank	1.25	1.50	3.95	4.65	3.60	4.45	4.35	4.25	4.10	3.90	3.90	3.90
Horizon Credit Union	1.25	1.50	3.70	3.70		4.10	4.50	4.30	3.70	3.60
HSBC	1.85	2.00	4.25	3.50	3.50	4.15	4.15	4.15	4.00	4.00	4.00	4.00
IMB			4.20			4.65		4.40	4.00	4.00	4.00	4.00
ING Direct			4.35	4.35		4.40	4.45	4.30	3.90
in1bank	3.85	3.90	4.45	4.40	4.30	4.25	4.10	3.95	3.85
Judo Bank			4.75			4.90	4.85	4.65?	4.55	4.45	4.55	4.55
Macquarie Bank	2.10	2.10	4.55	4.50		4.45	4.35	4.30	3.90	3.80	3.80	3.80
ME Bank	0.75	0.80	2.25	4.55	4.65	4.75	2.00	2.00	2.00	2.00	2.00	2.00
MyState Bank	0.50	0.50	4.00	4.20	4.60	4.75	4.60	4.55	3.95
Newcastle Permanent	1.00	1.00	4.00	4.00	4.00	4.65	4.00	4.45	4.00	4.00	4.00	4.00
People's Choice Credit Union		1.50	3.95	4.65	3.60	4.45	4.35	4.25	4.10	3.90	3.90	3.90
Police Bank			4.10	3.75	3.00	4.00	4.75	4.60
P&N Bank		1.60	4.00	4.00	4.65	4.45	4.30	3.60	3.60	3.55	3.55	3.55
RACQ Bank	0.55	1.60	4.85	3.50	3.50	4.65	4.40	4.40	3.90	3.50	3.50	3.50
Rabobank Australia	2.00	2.10	4.55	4.00	4.00	4.40	4.30	4.30	4.10	4.20	4.50	4.65
Rural Bank Limited	1.25	1.50	3.20	3.70	3.80	4.10	4.20	4.00	3.30	3.25	3.30	3.30
St.George Bank - Except VIC	1.25	1.45	3.00	3.15	3.25	3.40	3.60	4.00	3.30	3.30	3.30	3.30
Suncorp Bank	1.30	1.90	3.95	4.55	3.45	3.65	4.25	4.30	3.75	3.75	3.75	3.75
Teachers Mutual Bank			4.80	4.45	4.50	4.60	4.45	4.40	4.00	4.00
The Capricornian			3.00			3.25		4.00	4.00
Bank First	0.75	1.00	4.45	4.45		4.60	4.45	4.40	4.00	3.80	3.80	3.80