According to the Mozo database, there’s been an unusual trend in term deposits this month, with March being only the second month within the last 18 that saw more rate increases than cuts.
Lately, term deposit rates have hit rock bottom and with the RBA holding the official cash rate at 1.50% for the 20th month running, there was little expectation of a major break in deposits.
However, there was a silver lining this month, with a number lenders improving rates on term deposits of different lengths.
The best rates for less than a year and a one year term have come from the same bank, none other than ME Bank, which bumped up its 7 month rate by 20 basis points to 2.85% and its 8 or 9 month rate to 2.70% this month.
Bank of Queensland also added 15 basis points to its 12 month term, jumping from 20th position to 2nd, sitting right behind ME.
Suncorp increased its 1 and 2 month term deposits rates by 20 basis points, along with its 6 months flexiRate, rising from 2.30% to 2.50%, making it one of the better rates available for this term.
Mozo Data Manager, Peter Marshall, believes that the sudden adjustments to term deposits could be due to external influences.
“This is most likely a response to a funding squeeze,” he said.
“Interest rates in the US have gone up and are expected to continue rising, making it more expensive to source funds from the States. One option open to banks is to try to encourage more local deposits so they don’t have to resort to more expensive options.”
However, potential funding issues don’t seem to have bothered big bank Commbank , which cut its 5 month rate by 5 basis points, moving from 4th best rate for that term to 13th position.
CUA also followed the trend by cutting their 6, 9 and 12 month rates by 10 - 20 basis points, however, do still own the title of having the best rate of return on a 5 month term, after bumping up its rate by 15 basis points.
“While it’s great to see some positive adjustments and I think we'll see more small increases, there likely won’t be a major shift in term deposit rates,” says Marshall.
However, Marshall still encouraged Aussie depositors that scoring a sweet rate could still be within reach.
“Even though it may feel like we’ve hit rock bottom with term deposit rates, it's still possible to find a decent rate if you do your research,” he said.
So if you’re thinking of locking away some cash, our term deposit comparison tool compares term rates between 1 month to 5 years, helping you get the best return on your money.