Where to park your home deposit before the spring property season

The Reserve Bank of Australia (RBA) was widely expected to cut rates at its latest monetary policy meeting. However, that decision did not come to pass. Some would-be homebuyers may be tempted to hold off on entering the market until further cuts are announced.

This strategy may prove worthwhile. Three of the Big Four banks currently forecast further cuts to the cash rate before the end of 2025. With the potential for borrowing costs to improve further and the busy spring selling season fast approaching, you may be wondering where to keep your deposit to maximise returns while you wait to buy.

Here’s how you can put your deposit to work while keeping it safe and accessible – and potentially earn enough interest to cover upfront buying costs like conveyancing fees and building inspections.

1. Put your deposit in a high interest savings account

One of the most accessible options for short-term savings is a high interest savings account. These accounts let you earn a competitive interest rate while keeping your deposit liquid in case you’re ready to buy sooner than expected.

According to Mozo’s database, a few banks currently offer bonus interest rates above 5.00% p.a. – but there’s usually a catch. Many of these types of high-earning accounts come with strict monthly conditions to unlock the top rate, such as:

• Depositing a minimum amount each month
• Making no or limited withdrawals
• Growing the balance month-on-month

Still, if you’re confident you can meet the monthly criteria and want your funds readily available, a high interest savings account could be a savvy option, particularly if you’re waiting for the spring property selling surge.

2. Lock in a short-term deposit for guaranteed returns

If you're after certainty and don’t trust yourself not to touch your deposit, a short duration term deposit could be a better bet. 

It’s worth noting, though, that even the best term deposit rates are typically lower than the top high interest savings accounts – so you're trading off higher potential returns for certainty and discipline.

Unlike savings accounts, term deposits offer a fixed interest rate for a set period – and that rate won’t be impacted by any RBA decision. With many of the top rates now found in shorter terms (3 to 6 months), they’re ideal for homebuyers waiting out the next rate cycle or watching the market for the right property.

According to Mozo, some of the best rates available right now include:

• Judo Bank at 4.30% p.a. for 3 months
• BCU Bank at 4.55% p.a. for 5 months

With a term deposit, your money is locked away – which can be helpful if you don’t want to risk spending part of your hard-earned deposit on other things.

If you decide to roll over your term deposit upon maturity, you might consider a laddering strategy, where you split your funds into multiple term deposits of staggered durations (e.g. 3, 6 and 9 months). This can provide regular access to parts of your savings, while still benefiting from longer-term rates.

3. Alternative options for your deposit

While savings accounts and TDs are probably the safest places to store your deposit, there are alternative investment strategies you might consider if you’re comfortable with a bit more risk and you expect not to buy for 12 months or longer:

• Exchange Traded Funds (ETFs): These track a basket of assets like shares or bonds and can offer higher returns than savings products, though they come with market volatility.
• Offset account attached to a pre-approved loan: If you’ve already secured pre-approval and are close to purchasing, some lenders allow you to deposit your funds in an offset account, helping reduce interest from day one once your loan is activated.
• Government-backed bonds or savings schemes: Less common but sometimes attractive for conservative savers. Options like the First Home Super Saver Scheme also exist, though they may not suit those looking to buy in the immediate term.

Don’t let your deposit sit idle

With another rate cut likely on the horizon and a tentative property market heading into spring, the coming months could be prime time for first-home buyers, upgraders and investors to get their financial ducks in a row.

Rather than leaving your house deposit in a low-interest transaction account, consider parking it in a high-yield savings account or locking in a short-term deposit. Even a few hundred dollars in earned interest could go towards legal fees, stamp duty, or moving costs.

And remember – every dollar your deposit earns now gives you a stronger financial footing when it's time to make your move.