Term deposit rate slash frenzy: 50 lenders cut since February

By Katherine O'Chee ·

If you’re looking to save for a rainy day, then chances are you’ve thought about locking some cash away in a term deposit

But committed savers may have found their options increasingly squeezed, as term deposit rates over the past month or so continue to tumble, while a handful of savings rates also dropped after March’s RBA cut

New Mozo data reveals that since the start of February, 50 providers have slashed their term deposit rates, with average cuts ranging from 7 basis points to 13 basis points across all terms.^

This makes February the 17th consecutive month where the Mozo database recorded more term deposit rate cuts than increases. 

And according to Mozo’s interest rates expert, Peter Marshall, this is a downward trend we will keep seeing with term deposits. 

“We’re in a very low interest rate environment and I expect that to continue for years. So lenders are not going to be able to charge higher rates for home loans for a long time, which means they can’t offer much to depositors,” he said. 

Term deposit rate movements since February

Here’s a breakdown of the average falls in term deposit rates since February 1^:

Term
1 Feb 2020 (p.a.)Now (p.a.)^Difference (p.a.)
1 month0.89%0.76%- 0.13%
3 months1.46%1.35%- 0.11%
6 months1.48%1.39%- 0.09%
9 months1.38%1.31%- 0.07%
1 year
1.43%1.36%- 0.08%
2 years1.40%1.33%- 0.07%
3 years
1.39%1.31%- 0.08%
4 years1.38%1.29%- 0.09%
5 years1.39%1.29%- 0.10%

Right now, the average 1-year term deposit rate in the Mozo database sits at a paltry 1.36% p.a., although this is still higher than the corresponding rates offered by the big four banks. 

In terms of the big banks, while NAB and Westpac made no movements between February 1 and now, ANZ and Commonwealth Bank didn’t hold back the axe: 

  • CommBank shaved off between 5 to 30 basis points, with its 1-year rate now at 1.00% p.a.
  • NAB and Westpac’s 1-year rate are currently equal first among the big four, at 1.20% p.a.

Judo Bank still leading the way 

While Aussie savers may feel the strain of all-time-low interest rates, they shouldn’t lose all hope, as it’s still possible to secure a great deal. 

For instance, challenger bank Judo Bank has remained the term deposits leader in the Mozo database since its launch last year. If you sign up to its 1-year term, you’ll be looking at an impressive 1.95% p.a., while customers willing to part with their savings for longer can snag even more competitive rates of up to 2.15% p.a. (for its 5-year term).

RELATED ARTICLE: Judo Bank Term Deposit wins big in this year's Mozo Experts Choice Awards

And according to Marshall, unlike savings accounts, term deposits can offer security, as the rate you secure will be locked in for the duration of your term.

“In times of volatility where you never know what’s going to happen with the share market, for people who want to make sure that their capital is protected while also getting some return, a term deposit will always be a viable option,” he said. 

RELATED ARTICLE: Are term deposits worth it in 2020? 

Ready to build your rainy day fund today? Get started with some term deposit deals below, or jump over to our term deposits comparison table to compare even more options.

Compare term deposits - last updated November 28, 2020

Search promoted term deposits below or do a full Mozo database search. Advertiser disclosure.

  • mozo-experts-choice-2020
    Term Deposit

    0.75% p.a.
    1 year

    $25,000

    Yes up to $250,000

      Compare
    Details
  • Online Term Deposit

    0.75% p.a.
    1 year

    $5,000

    Yes up to $250,000

      Compare
    Details
  • Term Deposit

    0.45% p.a.
    9 months

    $10,000

    Yes up to $250,000

      Compare
    Details
  • Online Term Deposit

    0.90% p.a.
    2 years

    $5,000

    Yes up to $250,000

      Compare
    Details


^Mozo data as of 12 March 2020

*Different interest rates apply to different amounts or different interest payment frequencies.

^See information about the Mozo Experts Choice Term Deposits Awards

Mozo provides general product information. We don't consider your personal objectives, financial situation or needs and we aren't recommending any specific product to you. You should make your own decision after reading the PDS or offer documentation, or seeking independent advice.

While we pride ourselves on covering a wide range of products, we don't cover every product in the market. If you decide to apply for a product through our website, you will be dealing directly with the provider of that product and not with Mozo.

Katherine O'Chee
Money writer

Katherine O’Chee is Mozo’s international money transfer and forex expert and business banking writer. She keeps Mozo’s readers on top of the latest news and writes in-depth features to inform and help Australians make smarter financial decisions. Her work has been published in major media outlets including Sydney Morning Herald, SBS News and Bangkok Post. She has a Bachelor of Arts (Media and Communications) from the University of Sydney.