The term deposit war has just started. Is now the time to pick up a good interest rate?

Since the first RBA rate hike in May, we’ve seen financial institutions increase term deposit rates. In fact, in June alone we saw a total of 615 increases in our database.

But according to Mozo’s in-house banking expert Peter Marshall, “The term deposit wars have just started.” He says it’s likely we’ll see the space heating up in the next 12 months.

Before the May RBA hike, many banks, especially big banks, were offering “embarrassing rates” where customers were offered almost nothing for any term, says Marshall. 

That’s not the case anymore.

Below, you can see that the overall average of term deposits has increased throughout in the last year, slowly returning to rates from 2018. At a glance, the numbers may seem a bit low, but still, banks like AMP and Judo offer rates above a ‘3’, with several of the longer term deposits sitting above a ‘4’

Term Deposit Interest Rate Average

In 2018, the average for a 1-year term sat at 2.50% p.a. which is higher than the current 5-year term average. Several 5-year terms in our database currently start with a ‘3’. So it might assume that if rate hikes continue and we reach the same 1.50% cash rate of 2018, we could be seeing more 1-year terms starting with a ‘3’.

In fact, after June’s cash rate increase, several banks also announced increases to shorter term deposits. The big four now offer 11 to 15 month terms with a 2.50% p.a. rate, helping push the average closer to what it used to be in 2018.

If you have a large sum of money sitting in your savings account that you don’t need anytime soon, it might be worth looking into shorter term deposits.

Is it time to get a term deposit?

Westpac economists predict that the RBA isn’t done hiking the cash rate and will continue to make increases to the end of the year. 

So term deposit rates might continue to move up.

“It’s worth waiting another couple of months. Either that or put some money on a six-to-twelve month deposit now and take advantage of better rates when it matures,” says Marshall.

“I’m not sure how much further they’ll go up or whether the jumps will be as big as we’ve seen, but my feeling is it’s better to wait just a little bit longer right now. The competition has only just started to heat up.”

Term deposits to keep an eye on

While big banks have begun to offer higher rates on term deposits, they aren’t the ones offering the highest. 

At the time of publication, our database's current term deposit leaders are Judo Bank, AMP Bank and Challenger Bank. However, the competition is picking up, so we might be adding another bank to the list soon.

Judo Bank

AMP Bank

Challenger Bank

As you can see there are plenty of good options around for term deposit savers right now. 

If you want to stay up-to-date with the latest term deposit news, check out our term deposit news page. Alternatively, you can start comparing term deposits below to find one that works for you.