Some term deposit returns 'now higher than mortgage rates'

Some of Australia’s banks are now offering higher interest on their term deposits than they are collecting on home loans, a commentator has observed.

Writing for ninemsn, finance columnist Ross Greenwood said such "astonishing" deals were down to the banks’ desire to secure domestic sources of finance.

"It is most unusual, but shows the desperation of some to avoid funding massive tranches of debt in the offshore markets," he said.

The comments suggest that now is an excellent time to compare term deposits in search of the highest returns, particularly as global markets remain volatile. Mr Greenwood pointed to the Reserve Bank’s uncertain interest rate policies, which has been prompted by ongoing concerns over worldwide government debt crises.

"After all Glenn Stephens is the Governor who said that rates would rise gradually – and then slammed them up six times in eight months," he added.

Last week, John Kavanagh, a finance writer for the Sydney Morning Herald, argued that while Australians have benefited from a "rates war" in recent months with financial institutions competing for customer deposits, "savers should not assume their bank is always giving them the best deal".

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