Term Deposits

Summary:

Term deposit rates have been on the downhill since last year as speculation mounted of an imminent cut to the Reserve Bank cash rate which finally materialised in February. It saw rates with a 5 in front dry up and it seems safe enough to say it may be some time before depositors see those rates again. The current highest rate on offer, according to Savings.com.au data, is 4.84% p.a. for six months, offered by Heartland Bank. A number of small and challenger banks are currently offering 4.80% p.a. for terms between four and six months.

As reported last week, recent data from the Reserve Bank of Australia shows real returns (taking inflation into account) are now below zero on some deposit products. The figures show term deposit rates across all maturities averaged 3.20% p.a. in March, down from 3.25% p.a. in February. One-year deposit rates fell to 4.00% p.a. from 4.10% p.a. the previous month. Historically, banks have adjusted term deposit rates ahead of RBA moves to protect their net interest margins, so we may only be at the start of a downward trend in term deposit rates.

This week, ANZ, Suncorp and Heartland Bank were among several providers to slash term deposit rates in the week past, leaving only a few products remaining with a return above 4.80%

Notable weekly moves include:

• ANZ term deposit rates fall in line with big 4. ANZ has cut its term deposit rates across the board, falling into line with rates offered by its big four peers. ANZ was the last big bank standing by its term deposit offerings with the other three dropping rates last week amid the US trade tariff turbulence. Instead, ANZ chose to lower its business deposit rates although its top personal term deposit rate of 4.50% p.a. looked ripe for the slashing given its peers’ top offers were between 4.20-4.30% p.a. On Tuesday, ANZ made the predictable call to cut up to 25 basis points from its Advance Notice personal term deposit products. Its new top rate is now 4.25% p.a. for eight months for deposits between $5,000 to under $2 million.
• Heartland Bank cuts 5 bps. Heartland Bank is the latest casualty at the summit of the market, this week dropping its top rate down to 4.80% p.a. For now, there are still hold outs at 4.85% p.a. for six months, Gateway Bank being one example, but for anyone looking to invest in a TD soon, it might be sensible to get a move on – that rate might not be here in a week’s time.
• Suncorp cuts rates by up to 45 bps. Suncorp made sweeping cuts across its term deposit products, which range from one month to five years with various sized investments. Most products offer higher returns for higher deposits – on four month terms for example customers depositing more than $1 million will earn an extra 10 basis points compared to someone putting in $5,000, which feels a bit unfair. However, Suncorp continues to make its top rate (now 4.55% p.a. after a 0.15% cut) available to all customers who open a six month term deposit. That rate may have come down, but among the top 10 banks in Australia by customer deposit book size, Suncorp has the strongest TD rate, beating out ING and Bank of Queensland.

Other movers

• Macquarie Bank cuts rates up to 20 bps
• MOVE Bank cuts rates by up to 15 bps
• Gateway Bank cut its one year rate 5 bps to 4.50% p.a.
• Teachers Mutual Group cut rates by up to 50 bps
• Bank Australia cut rates 30 bps
• Bank of Us cut rates up to 15 bps

Term deposit rates by Institution.xlsx

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	3.05↓	3.15↓	3.30↓	3.50↓	3.90↓	3.65↓	3.1	3.1	3.1
Commonwealth Bank	1.25	1.5	2.9	3.1	3.15	3.2	3.4	3.90↑	3.75	3.5	3.5	3.5
NAB	1.25	1.45	3	3.05	3.15	3.3	3.5	4	3.8	2.9	2.9	2.9
Westpac	1.25	1.45	2.9	3.05	3.15	3.3	3.5	3.9	3.65	3.15	3.15	3.15
Military Bank			3.5	4.30↑	4.45↑	4.65↑	4.50↑	4.45↓	3.80↓	3.80↓
AMP Bank	0.1	0.2	4.35↓	4.40↓	4.45	4.40↓	4.20↓	4.05↓	3.70↓	3	3	3
Arab Bank Australia	1.25	1.25	4.05↓	3.90↓	3.90↓	4.60↓	4.30↓	4.10↓	3.60↓	3.50↓	3.50↓	3.40↓
Bank of Melbourne	1.25	1.45	2.9	3.05	3.15	3.3	3.5	3.9	3.05	3.05	3.05	3.05
Bank Australia			4.45	#VALUE!	#VALUE!	4.35↓	4.00↓	4.00↓	3.80↓	3.80↓
BankSA	1.25	1.45	2.9	3.05	3.15	3.25	3.45	3.85	3.85	3	3	3
Bankwest	2	2	3.75	3	4.4	4	4	4	3.75	3.75	3.75	3.75
Bank of Sydney	1.25	1.5	3.25	3.5	3.5	4.4	4.20↑	4.20↑
BankVic			3.6	4	3.7	4.45	3.7	4.2	4	4	4	4
Beyond Bank			4.55			4.4	4.15↓	4.10↓	3.60↓	3.50↓	3.50↓	3.50↓
Bendigo Bank	1.25	1.5	2.90↓	3.40↓	3.10↓	3.80↓	3.70↓	3.60↓	2.95↓	3.00↓	3.00↓	3.00↓
BOQ	0.75	0.8	2.25	4.45	1.25	4.5	4.35	4.2	4.2	3.3	3.3
BOQ Specialist			4.5	4.55		4.65	4.55	4.25	3.5	3.5	3.5	3.5
Great Southern Bank	1.3	1.6	4.45↓	4.70↓	4.45↓	4.60↓	4.30↓	4.20↓	3.60↓	3.40↓	3.40↓	3.40↓
Defence Bank			4	3.60↑	3.70↑	4.20↑	4.25↑	4.45↑	3.75↓
Greater Bank	1	1	4	4	4	4.65	4	4.45	4	4	4	4
Heritage Bank	1.25	1.5	3.95	4.65	3.6	4.45	4.35	4.25	4.1	3.9	3.9	3.9
Horizon Credit Union	1.25	1.5	3.7	3.7		4.1	4.5	4.3	3.7	3.6
HSBC	1.85	2	4	3.5	3.5	3.9	3.9	4.05	4	4	4	4
IMB			4.2			4.50↓		4.25	3.75↓	3.75↓	4	4
ING Direct			4.25	4.25		4.5	4.3	4.05	3.8
in1bank	3.85	3.9	4.45	4.4	4.3	4.25	4.1	3.95	3.85
Judo Bank			4.75	#VALUE!		4.8	4.65	4.50↑	4.3	4.2	4.2	4.25
Macquarie Bank	2.1	2.1	4.35↓	4.25↓		4.10↓	3.90↓	3.80↓	3.60↓	3.65↓	3.8	3.8
ME Bank	0.75	0.8	2.25	4.35↓	4.40↓	4.50↓	2	2	2	2	2	2
MyState Bank	0.5	0.5	4	4.2	4.6	4.6	4.4	4.25	3.95
Newcastle Permanent	1	1	4	4	4	4.65	4	4.45	4	4	4	4
People's Choice Credit Union		1.5	3.95	4.65	3.6	4.45	4.35	4.25	4.1	3.9	3.9	3.9
Police Bank			4.1	3.75	3	4.25	4.5	4.45
P&N Bank		1.6	3.9	3.9	4.6	4.3	4.3	4.30↑	4.30↑	4.30↑	4.30↑	4.30↑
RACQ Bank	0.55	1.6	4.85	3.5	3.5	4.65	4.4	4.4	3.9	3.5	3.5	3.5
Rabobank Australia	2	2.1	4.45↓	4	4	4.35↓	4.05↓	3.85↓	3.60↓	3.8	4.15	4.3
Rural Bank Limited	1.25	1.5	2.90↓	3.40↓	3.10↓	3.80↓	3.70↓	3.60↓	2.95↓	3.00↓	3.00↓	3.00↓
St.George Bank - Except VIC	1.25	1.45	2.9	3.05	3.15	3.3	3.50↑	3.9	3.05	3.05	3.05	3.05
Suncorp Bank	1.3	1.9	3.90↓	4.40↓	3.45	4.55↓	4.00↓	3.85↓	3.35↓	3.35↓	3.35↓	3.35↓
Teachers Mutual Bank			4.40↓	4.25↓	4.05↓	4.60↑	4.30↓	4.30↓	3.80↓	3.80↓
The Capricornian			3			3.25		4	4
Bank First	0.75	1	4.35↓	4.35↓		4.50↓	4.35↓	4.25↓	3.80↓	3.8	3.8	3.8