Is now the perfect time to nail down a tasty term deposit rate?

Stashing away a stack of cash in a good value term deposit might have been a surefire way to grow your nest egg in years gone by, but over the past 18 months saving rates have been on a downward spiral - until now that is.

Since March 1, Mozo’s database has seen a staggering 25 providers hike interest rates on their term deposit products and according to the Mozo Banking Roundup, April was the second month in a row where the number of rate increases outnumbered decreases.

After a couple of tough years for term deposit lovers across the country, Mozo Director Kirsty Lamont, said this was welcome news for Australians who prefer a set-and-forget savings strategy.

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“For the first time in a long time, we’re seeing some good news for savers with banks finally hiking rates on term deposits. It’s undoubtedly the most positive change we’ve seen in years,” she said.

Why are term deposit rates climbing?

Interest rates - whether they be on your home loan or savings account - tend to move when the official cash rate moves, but you have to go all the way back to November 2010 to find the last time the RBA hiked the official cash rate.  

So, what else is having an influence on these term deposit changes?

A plausible reason put forward by Mozo’s Product Data Manager, Peter Marshall is that overseas funding costs are forcing banks to look for more money closer to home.

“Interest rates in the US have gone up and are expected to continue rising, making it more expensive to source funds from the States,” he said.

“One option open to banks is to try to encourage more local deposits so they don’t have to resort to more expensive options.”

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And with the RBA indicating that rates aren’t going anywhere for a little while longer, now could be the perfect time to keep your eye on the term deposit market and potentially secure a high-yielding, fixed interest rate for your savings.

What are rates looking like now?

Over the past few months, the likes of ME, Suncorp and AMP have all moved on term deposit rates, but we haven’t seen a positive change to a market leading rate in a little while.

That has left the following products leading the pack in Mozo’s database, across a range of term lengths:

But what does that mean for your money? Well, according to our term deposit calculator, a savvy-saver who is happy to lock away $20,000 for one year with ME would accrue $550 in interest.

Say that same person wasn’t fussed making a five year commitment to Greater Bank, they’d earn a $3,200 return on their $20,000 deposit.

Got some money that you’re ready to stash away at a fixed rate for a period of time? You can make sure you’re getting great value by heading to the Mozo Experts Choice Awards hub page and selecting a term deposit that best meets your needs.