Rate cut party over? Major banks quietly slash term deposit interest rates
The lucrative term deposit interest rate hikes of up to 0.85% introduced by Australia’s biggest banks following August’s RBA rate cut have been short lived, as a large number of top rates were reduced last month, according to Mozo data.
As detailed in the latest Banking Roundup, term deposit accounts offered by major providers suffered in October. Westpac’s one year term deposit was slashed by a steep 50 basis points to 2.50%, while its two, three and five year term deposit rates were also slightly reduced. Competitor big bank, NAB also quietly brought its eight month term deposit rate down by 50 basis points.
ANZ, broke the trend however, by increasing most short term rates in October by up to 50 basis points, while leaving its best rate for less than one year unchanged at 2.20%. Challenger brand ME Bank also came to the term deposit party, by hiking its six month and four year rate to 3.10%.
“With the big banks back pedalling on their term deposit rate hikes, it seems that the whole exercise was a bit of a PR stunt,” said Mozo Director Kirsty Lamont.
By passing on rate increases to term deposit customers, Lamont explained it took some of the pressure away from the banks for failing to pass on the full August Reserve Bank rate cut to home loan customers.
“Considering the Reserve Bank is tipped to slash the official cash rate again sometime in 2017, customers looking for a competitive term deposit deal should really jump on them now, before they are reduced again,” Lamont advised.
To give you a snapshot, here are the top term deposit rates:
| Term | Provider | Interest rate |
|---|---|---|
| 6 month 9 months 1 year | ME Bank ME Bank Big Sky and QT Mutual Bank | 3.10% 3.00% 3.05% |
If you found this table helpful to gauge the market, you’re going to love our term deposit comparison hub, with around 73 products from 64 providers to choose from.
* 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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