Strong term deposit rates tipped to last into 2017 despite cuts in November
The afterglow of the competitive term deposit deals that were introduced after August’s RBA cash rate cut has well and truly faded, after providers reduced rates 137 times in November while increasing them on only 31 occasions, Mozo data revealed.
As detailed in the latest Banking Roundup, ME Bank sliced six month term deposits from 3.10% down to 2.75%, while smaller provider Big Sky slashed one year rates from 3.05% to 2.65%. CBA was the only big four bank to adjust term deposits, modestly cutting between five and ten basis points across a range of terms.
This comes as a rate hike flurry simultaneously took place last month when lenders slashed fixed rate home loans - another indication of banks moving against the RBA’s cash rate.
But the term deposit scene isn’t all doom and gloom, as Mozo data found that interest rates on one year terms were largely left unchanged last month. While ME Bank cut rates on shorter term deposits, customers can look to its eight and 11 month deposits, which propped up by 0.35 and 0.40 basis points respectively.
The good news doesn’t stop there, with Mozo’s Product Data Manager Peter Marshall, tipping term deposit providers to maintain their current offerings well into the New Year.
“With many lenders hiking fixed rate home loans in November, it may provide them with more space to maintain current term deposit rates in 2017,” he said.
“If the RBA sits on its hands for the next six months, I don’t think term deposit rates will fall much further.”
Top term deposit rates:
|Under 1 year||Goldfields Money||2.95%|
|1 year||ING Direct||3.00%|
Even though the best deposit rate has a two year term, Marshall advised savers to consider locking their cash into a one year TD instead.
“I’d recommend you go for the best one year rate you can find, so by this time next year, you can reassess your options”.
If you’re looking for a place to stash your savings, head to our TD hub where you can compare around 70 products offered by 64 providers.