Term deposit holders benefiting from competition, says RBA

Term deposit holders are benefiting from a shift in the nature of competition within the banking sector, a Reserve Bank (RBA) official has said.

RBA deputy governor Ric Battellino argued that while home loan borrowers could get "extraordinarily good deals" ten years ago, the dwindling availability of funding has meant that depositors are currently getting such good offers.

Speaking at a luncheon in Perth, reported by ABC News, Mr Battellino therefore suggested that now is particularly good time to compare term deposits and secure high returns.

"There's just been tremendous competition for deposits because banks really value deposits at the moment," he said.

"You can get as much as seven per cent on a deposit at the moment. It's an extraordinarily high rate given where the cash rate is."

Mr Battellino also spoke out in opposition to the Greens' recently proposed legislation which aims to bring in a 24-month ban on banks increasing their lending rates by more than the official cash rate.

He said that it was necessary for the banks to pass on higher funding costs.

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