Term deposits July: Slow, but steady improvements predicted

As the new 2021/22 financial year begins, the outlook for term deposits is a little rosier. 

Interest rate cuts for terms were coming thick and fast in 2020, but have eased off in the past six months. In December last year, our research team counted a staggering 785 interest rate cuts to term deposits tracked in the Mozo database. In June 2021 that figure fell to 125.

1-year term rate unchanged

“The pace of cuts to term deposit rates has certainly slowed in the last couple of months, and we’re even seeing some providers increase rates across some or all terms,” said Mozo Interest Rates Expert Peter Marshall.

For example, of those Mozo currently tracks, the average interest rate for a 1-year term deposit remained unchanged at 0.52% in May and June (based on $25,000 investment). Chances are interest rates for these terms could stay steady in July too. 

Plus, as Marshall said Mozo also counted a number of interest rate increases in June.

Interest rate increases

In total our team noted 28 interest rate increases from nine term deposit providers in June. The banks which increased interest rates for term deposits were:

• Firstmac
• Southern Cross Credit Union
• bcu
• Queensland Country Bank
• QBank
• ME Bank
• Illawarra Credit Union
• Suncorp
• P&N Bank

The biggest rate rise came from Firstmac, which increased its 2-year term offering by 45 basis points to 0.75% p.a. The next biggest was Illawarra Credit Union which upped its 9-month term deposit rate by 30 basis points to 0.55% p.a. 

Both Suncorp and Southern Cross Credit Union increased term deposits by as much as 25 basis points. Suncorp increased its 8-month term to 0.45% p.a. and Southern Cross Credit Union increased its 9-month rate to 0.60% p.a.

Marshall commented that providers increasing rates tend to be smaller mutuals. So to find more competitive rates, people may need to do their research and look beyond the big bank names they are familiar with.

Competitive term deposits for your tax return

Of course another thing that happens in July is tax returns. Early birds might even be getting their receipts in order already, to see how much they can claim. If that includes you, your thoughts might have moved on to what you are going to do with the cash once you get it. 

One idea is to put it in a term deposit. If that’s the case, you’ll want to make sure you get the most competitive interest rate for your money. Once again, Judo Bank is sitting in the top position in the Mozo database for a range of terms. Its most competitive rates at the moment are:

• 6-month term deposit - 0.90% p.a.
• 9-month term deposit - 0.90% p.a.
• 1-year term deposit - 1.00% p.a.
• 2-year term deposit - 1.20% p.a.
• 3-year term deposit - 1.15% p.a.
• 4-year term deposit - 1.40% p.a.
• 5-year term deposit - 1.60% p.a.

Finally, if you are looking to put your refund in a term deposit, just keep in mind that most require a minimum deposit amount, with Judo Bank this is $1,000.

Want to compare more term deposits? Head to Mozo’s compare term deposits page to see more, or check out the offerings below.

*Average calculated using information available in the Mozo database, correct as of 30 June 2021.