Term deposits snapshot: Interest rate cuts predicted to slow down in September

By Tara McCabe ·

Interest rates for term deposits have felt a bit like a free falling roller coaster for the past few months. The good news is these relentless cuts might actually be slowing down. Or in other words, we might be coming to the end of the ride.

In Mozo’s latest Banking Roundup, our research experts revealed that although there were term deposit rate cuts in August, there were far fewer than in the months beforehand. This suggests that term deposits could be heading for an interest rate floor.

Three out of four major banks cut

While ANZ was the only big four bank to leave its term deposit rates as is in August, the rest (Commonwealth Bank, NAB and Westpac) did not make as many cuts compared to July.

Commonwealth Bank shaved five basis points off its most competitive rate for its ten-month term deposit. Taking it down from 0.90% p.a. to 0.85% p.a. Meanwhile, NAB and Westpac reduced rates for their shorter terms with both banks slicing between five and ten basis points off select offerings.

Shorter terms hit harder than longer terms

On the whole, shorter terms have been hit harder than longer terms by the slew of rate cuts. The average interest rate for each term has fallen by between 43 and 62 basis points, since the start of 2020.

Right now, there are more competitive interest rates to be had with terms between one and five years. Of course, whether or not you want to lock your money away for that long is another question.

Currently Judo Bank holds the top spots for all longer terms. Their rates are as follows:

  • 1 year TD - 1.38% p.a.
  • 2 year TD - 1.45% p.a.
  • 3 year TD - 1.55% p.a.
  • 4 year TD - 1.40% p.a.
  • 5 year TD - 1.45% p.a.

September 2020 and beyond

Of the 86 term deposit providers that our research team tracks, 58 cut interest rates in August. That’s considerably less than the 70 that reduced rates in July.

Judging by the slowing down of activity last month, our research team anticipate that there will be fewer cuts in September. In fact, our experts predict that we may even be heading towards an interest rate floor.

Just like the last five months, the next twelve months is bound to be marred by uncertainty. If you’re worried about your finances, then why not consider locking in an interest rate now and parking your money in a term deposit.

Check out the one-year term deposits below, or head to Mozo’s compare term deposits page for more options.

Compare one-year term deposits - last updated November 21, 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.
    1 year

    $10,000

    Yes up to $250,000

      Compare
    Details

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

^See information about the Mozo Experts Choice Term Deposits Awards

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Tara McCabe
Money writer

Tara McCabe writes across all areas of personal finance here at Mozo from banking through to insurance. Tara is expert at practical money tips, showing readers ways to live richer and be socially conscious while doing it. She earned a BA (Hons) in English Literature from Canterbury Christ Church University.