Judo Bank bucking the trend with new 2.50% term deposit rate

Challenger bank Judo Bank has today unveiled a host of term deposit rate changes, chief among them a 0.25% increase to its five year term deposit rate which now sits at 2.50%. 

The move means the Judo Bank five year term deposit has consolidated its position as the highest term deposit rate currently on offer in the Mozo database - a full 0.80% higher than the second highest five year rate in the database.

According to the Mozo term deposit calculator, a $25,000 deposit at 2.50% would generate $3,125 in interest over a 5 year term. That compares to just $1,775 in interest for the same sized deposit over the same period on the average rate 5 year term deposit rate currently in the Mozo database of 1.42%.  

“Judo has strong growth aspirations and is keen to underpin this with longer term deposits. We believe this creates a good stable base for Judo to achieve its goals and provides great value for customers, motivated by better returns,” said Patrick Nolan, General Manager Deposits at Judo Bank.

“We understand our customers are looking for value and a number of our competitors are dropping their deposit rates. We have structured our business to enable us to pay higher rates while still supporting our growth aspirations - we want to reward those customers who have joined us at a time when other investment options are being considered because of their returns.”

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Judo Bank also increased the interest rates on a number of its other longer term deposit offers this morning, including: 

  • - 2 year term deposit: Increased by 0.20% to a new rate of 2.20%  

  • - 3 year term deposit: Increased by 0.30% to a new rate of 2.30%

  • - 4 year term deposit: Increased by 0.15% to a new rate of 2.40%

That means that Judo Bank has the market leading term deposit rates in the Mozo database for six of the seven term deposits it has on offer. 

According to Mozo Banking Expert, Peter Marshall, there are likely a number of reasons why Judo has been able to increase their rates in recent weeks.  

“Judo can probably afford to pay a bit more for deposit funds because their loan portfolio at the moment is all business loans, so if they’re charging rates that are meaningfully higher than mortgage rates then they’ve got more room to move than a full service lender,” he said. 

“A bank with a full range of products would really struggle to offer 2.50% right now, so Judo’s benefiting from being in a unique position. Ultimately, this is a win-win for people looking for a term deposit because they get a competitive rate along with the government guarantee up to $250,000.”

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Have we reached a turning point for term deposit rates? 

Judo Bank is not alone in increasing its rates though, as a handful of other banks have also adjusted their own term deposits in the past month, including offers with some of the sharper rates currently available.

Among the standout movers, Bank of Sydney has lifted interest rates on nine term deposit offers in the past month - six of which are currently market leading rates in the Mozo database. 

AMP, Bank Australia, Suncorp and Bank of us have also increased rates on multiple term deposits in recent weeks, though according to Marshall, these rate increases are still the exception rather than the norm.  

“The overall trend is still down because we’ve still been seeing more rate cuts than increases,” he said. 

“Some of the banks may have cut a bit too far and realised that they’re not getting the inflows that they want, so now they’re making relatively small adjustments to improve their position in the market.” 

“With only one likely Reserve Bank cut left, at least for the foreseeable future, it is possible that banks may be thinking that they’ve gone far enough in cutting rates, but we’ll have to wait and see whether that holds true when the RBA moves again.” 

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Ready to read up Judo Bank’s offer? Check out our full Judo Bank Term Deposit review, or head over to the Mozo term deposit comparison hub to compare and even larger selection of offers.

* Different interest rates apply to different amounts or different interest payment frequencies.

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