Are rising term deposit rates the silver lining to home loan rate hikes?

By Ceyda Erem ·

Term deposit rates for terms of 1 - 3 years are at the highest they've been since 2017, upholding the continuous trend of rate increases.

And according to the Mozo database, there were more than 10 times the number of rate increases in June as  the number of decreases.

Some of the biggest rate changes recorded in our database included AMP, improving all terms for 8 months or longer by 5-20 basis points. Their 24 month term was also a winner, now sitting at 2.95%, the third best in the market for that term.

Big bank ANZ also increased their 9 month rate by 10 basis points, now 2.60%, while Greater Bank hiked their 1 year rate by 15 basis points, which is now tied with Maitland Mutual as market leaders with a rate of 2.90%.

RELATED: Award winning term deposits to grow your savings stash

And among the smaller players, Arab Bank Australia, Bank First, Bank Of Us, MyState, The Rock and Rural Bank increased the value of all or most of their rates by 5-20 basis points.

“These rate increases are linked to the overseas funding pressure banks are facing, so they’re really looking to encourage more local deposits,” said Mozo Product Data Manager, Peter Marshall.

“Homeowners are no doubt feeling the heat due to the recent home loan rate hike, but the silver lining is that people with savings might be now able to get a better return on a term deposit.”  

RELATED: Bank First launches innovative interest-first offer as term deposit rates begin to creep up

Looking beyond the big banks

If you’re looking to lock away some cash, it can be tempting to take up a term deposit offered by a big bank.

However, we took our term deposit calculator for a spin to find out how Aussies can get the best return on their term deposit and found that major bank’s don’t always stack up in terms of value.

Say you deposited $5,000 for a 2 year term at an interest rate of 2.40% - Westpac’s current 2 year rate - you would earn $260 in interest. But if you opted for Greater Bank’s market leading rate of 3.00% on the same term, you could stack up $300 in interest.

“It’s easy to pick a big bank for your term deposit because they’re widely recognised, but it doesn’t mean you’ll be getting the best bang for your buck,” said Marshall.

Compare your term deposit options by using our term deposit comparison tool, which currently compares rates from 64 banks.

Ceyda Erem
Ceyda Erem
Money writer

Ceyda Erem is Mozo’s authority on Energy, as well as having broader expertise as a personal finance writer. She loves to put her researching and writing talents into stories that help our readers to make more informed financial choices, whether that’s about finding the best energy deal or writing about the latest sneaky bank tricks. Ceyda has a Bachelor of Arts (major in writing) from Macquarie University.