Last call for term deposits.

By Mozo ·

Term deposit rates have faired pretty well over the current cycle of interest rate cuts but that could soon be about to change.

Home loan holders have been stirred into an angry mob by major banks who have refused to pass on full interest rate cuts, meanwhile, term deposit holders have been sitting quietly, content with the passable rates still being offered in comparison to the cash rate.

With the high costs of global funding, the banks have been finding it better to raise funds from the local retail market, resulting in term deposit rates remaining fairly high, due to competition amongst the banks. But with the cost of wholesale funding from overseas starting ease, the banks may no longer find it necessary to fight for term deposit holders, meaning interest rates paid on deposits may soon begin to decline, reports The Age Business Day.

"I would expect that as long as there's continued strength in those wholesale funding markets, I would think there will be some abatement around the pricing of retail deposits," according to Bendigo bank managing director Mike Hirst.

With the cash rate widely expected to take at least one more cut this year, with no signs of any hikes in the near future, this could be the last call for high interest term deposits for sometime. But while interest rates between 4.5 percent to 5 percent are still readily available on the market, investors may have to act quick to snap up a top rate.

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