NAB slashes term deposit rates again: 55 banks cut this month in ‘race to the bottom’
Aussie long-term savers, you’re in for some bad news: in light of multiple Reserve Bank cuts this year, term deposit rates have tumbled once again, with big bank NAB today announcing another series of cuts between 10 to 20 basis points.
All of NAB’s term deposit rates starting from 30 days have taken a beating. A significant 20 basis points were slashed from its 1 year and 5 year term deposit rates, dragging both down to a low 1.40%. Its rates for 13 months up to 4 years also dropped 20 basis points to 1.30%.
This follows NAB’s term deposit cuts earlier this month, where it slashed 25 basis points from its 4 month rate and 10 basis points from its 5 month rate.
But NAB isn’t the only one. Our Mozo data experts crunched the numbers and found that 55 providers have cut their term deposit rates so far this month, including the other three big banks:
- Commbank: 10 basis points cut on all rates
- ANZ: 10 to 15 basis points cut on all rates
- Westpac: 10 to 20 basis points cut on all rates
According to Mozo’s banking expert, Peter Marshall, term deposit rates have been declining for months now, and that’s been partly due to, “... the RBA rate cuts and the expectation that the RBA hasn’t finished cutting, with two more forecasted for this current cycle, including one next week.”
Marshall added that when it comes to term deposits, banks aren’t feeling the pressure to stay competitive.
“With so many providers cutting, there’s no competition out there for deposit funds,” Marshall said. “So it creates a self-fulfilling prophecy, where some providers have taken the view that they don’t need to have such high rates and others have followed suit, creating a race to the bottom.”
The slippery slope of term deposit rates
According to Mozo data*, average term deposit rates have fallen significantly since the beginning of the year:
| Term | 1 Jan 2019 (p.a.) | Now (p.a.) | Difference (p.a.) |
|---|---|---|---|
| 3 months | 2.20% | 1.68% | - 0.52% |
| 6 months | 2.35% | 1.66% | - 0.69% |
| 9 months | 2.24% | 1.58% | - 0.66% |
| 1 year | 2.51% | 1.65% | - 0.86% |
| 3 years | 2.65% | 1.61% | - 1.04% |
| 5 years | 2.74% | 1.58% | - 1.16% |
On average, declining rates have hit longer offers the hardest, with 3 year and 5 year terms plummeting by more than 1.00% since the start of 2019.
For Aussies hoping to park some of their money somewhere that will earn them more generous amounts of interest, Marshall said shopping around could help you snag a better deal.
“Be ready to consider banks that are outside the major banks. The major banks are often not very competitive, and that’s particularly true for deposit rates,” he said.
“If you’re concerned about security, be assured that the Australian government guarantee for deposits of up to $250,000 applies to all authorised deposit-taking institutions. In other words, there’s no real difference in risk in putting your money with a small credit union or a mutual versus a major bank.”
“So don’t let that stop you from checking out providers beyond the big brands you know.”
Where to find today’s top term deposit rates
With the Reserve Bank’s monthly meeting just around the corner and experts predicting another cash rate cut, banks could be preparing for doomsday by lowering their term deposit rates even further. So if you’re on the hunt for a way to save up in the long run, now could be a good time to get into the term deposit market and snatch up a hot rate before it’s too late.
Who’s killing the rates game today? None other than Judo Bank, a neobank that’s shaking things up with ultra competitive term deposit rates.
Meanwhile, for shorter term deposits of up to 7 months, the highest rates belong largely to Mozo Expert Choice Award winning ME Bank, who took home our trophy for Australia’s Best Banking last year.
Here’s a closer look at where you can find today’s top rates**:
| Term | Top rate today (p.a.)** | Bank |
|---|---|---|
| 3 months | 2.00% | ME Bank, MyLife MyFinance, Regional Australia Bank |
| 5 months | 2.00% | ME Bank |
| 6 months | 2.05% | ME Bank |
| 7 months | 2.00% | ME Bank |
| 9 months | 2.40% | Judo Bank |
| 1 year | 2.40% | Judo Bank |
| 2 years | 2.25% | Judo Bank |
| 3 years | 2.20% | Judo Bank |
| 4 years | 2.10% | Judo Bank |
| 5 years | 2.10% | Judo Bank |
Ready to hop onto a great deal today? Head over to our term deposit comparison table to compare deals from even more banks and get started on finding a term deposit that suits you.
* Percentages in the table are averages at a $10,000 balance, as of 26 September 2019.
** Figures drawn from Mozo's database, as of 26 September 2019.
* Different interest rates apply to different amounts or different interest payment frequencies.
^See information about the Mozo Experts Choice Term Deposit Awards
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