Term Deposits unlikely to be persecuted further.
Article by Mozo
With a recent shift in the assumptions of further interest rate cuts this year, it seems that term deposits and savings accounts will be spared from any further decline, according to The Australian.
Previous sentiment was that Australia's Reserve Bank would come into the new year with guns blazing and interest rates being ferociously cut down in order to keep Australia's economy moving. But with positive signs showing from both Europe and the U.S. as well as steady growth in the local economy, further cuts to interest rates are likely to be more modest, if at all.
Currently the popular outlook amongst many economists is that rates will not go down much further than 2.75 percent Cuuerntly at 3 per cent), 2.5 percent if mortgage holders are lucky. However, considering a large proportion of Australians are saving like never before, there will be many who will be relieved to see the interest rates on term deposits and high interest savings accounts stay put.
The News Limited Network recently reported on Mozo's findings that the average rate of 180 day term deposits currently sits around 3.89 per cent compared to 5.45 per cent back in 2011.
"One and two-year rates in particular have fallen sharply and by more than the fall in the cash rate since March 2011," according to Mozo's Kirsty Lamont.
Despite this Australia's savings habits have stuck, said ING Direct executive director John Arnott.
"Customers out there are looking for certainty and also flexibility when their term deposits mature," Mr Arnott said.
Similarly UBank have recorded a 10 per cent growth in the amount of term deposits since October but with customers opting for longer terms.
According to HSBC Australia Chairman Graham Bradley, households will continue to save a high proportion of their incomes for years to come, with this high percentage of savings becoming the new normal, reports the Brisbane Times.
With this news it seems that many would benefit from a term deposit comparison to find the best rates at a term that best suites their individual needs
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