Why term deposit rates have taken a tumble
Term deposit interest rates are being cut at a noteworthy level this month and the question for would-be savers surely is, why?
Among the major banks cutting rates are CommBank, NAB, ANZ, as well as leading neobank, Judo.
Mozo’s Banking Expert, Peter Marshall says, "As confidence in the direction and timing of the Reserve Bank's next cash rate movement becomes more certain, banks are preparing for that change by adjusting their rates for both deposits and loans.
“Banks are starting to bring down fixed deposit and loan rates now as the RBA is expected to start bringing down the cash rate either later this year or in the first half of next year."
Spending versus saving
The RBA also notes that household wealth has grown over the past year (5%) and is 22% higher than prior to the pandemic. The increase in wealth since the pandemic has been driven by strong housing price growth, additional savings by households during the pandemic and equity price increases.
More so-called wealth has led to more spending, and increased spending - along with reduced saving in 2024 - is impacting inflation.
In May, CBA reported that spending increased by 2.5% nationally, with ‘essentials’ increasing by 3.6%. However, since then consumers have been cutting back and spending levels have generally dropped, CBA says. (The figures get complicated because different age groups and cohorts are behaving differently).
RBA rate cuts ahead?
All up, CBA now expects softer economic data ahead, a further deceleration of inflation, and easing of monetary policy by overseas central banks which will likely lead to the RBA cutting interest rates in the months ahead.
If this is the case, long-term savers might prefer to lock in a good term deposit rate sooner rather than later.
CBA, NAB, ANZ and Judo among term deposit rate cutters
Commonwealth Bank, NAB, and ANZ all reduced term deposit rates this month.
CommBank dropped its term deposits by as much as 60 basis points, while NAB and ANZ have made even steeper cuts of up to 80 basis points.
Other providers such as AMP and Judo Bank also didn’t shy away from some downwards adjustments too. For now, it looks as if providers are tightening up on most terms.
Best term deposit rates available
Despite these recent cuts, some more attractive rates can still be found in the Mozo database, particularly in the 6 to 12 month term deposit range.
Plus, several providers in our database continue to offer rates around the 5% range.
For example, on 6 month terms:
- G&C Mutual is currently the leading rate at 5.20% p.a.
- Heartland Bank offers 5.15% p.a. on its 6-month term
- Australian Unity, Bank of Sydney, Gateway Bank, ING, and Judo Bank's 6-month terms are all at 5.10% p.a.
While for 12 month terms:
- G&C, Heartland, and Illawara credit union are tied for the highest rate at 5.10% p.a.
- ING offers a 5.05% p.a. rate
- A little over a dozen other providers offer 5.00% p.a.
All of these stack up pretty well given that the average (based on balances of $25,000) in the Mozo database for 6 months is 4.41% and 4.63% for 12 month term deposits as of the 21st August 2024.
Term deposit trends in 2024
Banks have increased rates on new term deposits by around 435 basis points since February 2022, slightly more than the cash rate, the Reserve Bank reported in April.
However, recent rate cuts show that many providers likely believe that rate cuts are possible in the not so distant future.
To compare term deposit rates, head over to our term deposit landing page. Alternatively, you can check out some providers in the tables below…
Term deposit comparisons on Mozo
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Mozo experts choice awards won:
- Term Deposit - 2024
Term Deposit
5.00% p.a.
6 months$1,000
Yes up to $250,000
Great rates and incentives incl. 0.10% added loyalty bonus at renewal. Option to have interest paid to another bank. Winner of the Mozo Experts Choice Awards 2024^ for Term Deposits.
CompareCompareTerm Deposit
Great rates and incentives incl. 0.10% added loyalty bonus at renewal. Option to have interest paid to another bank. Winner of the Mozo Experts Choice Awards 2024^ for Term Deposits.
- interest rate
- 4.90% p.a.
- Minimum deposit
- $1,000.00
- Govt Deposit Guarantee
- Yes up to $250,000
- Minimum deposit
- $1,000.00
- Maximum deposit
- $2,000,000.00
- Can interest be paid to another bank?
- yes
- Automatic rollover
- yes
Read our Mozo Review to learn more about the Judo Bank Term Deposit
-
Mozo experts choice awards won:
- Term Deposit - 2024
Term Deposit
4.65% p.a.
7 months$10,000
Yes up to $250,000
Minimum $10,000 deposit. No account keeping fees. Terms from 3 months up to 2 years. Interest can be paid into a different bank. Balances up to $250,000 are guaranteed by the Australian Government. Mozo Experts Choice Awards Everyday & Savings Bank of the Year winner for 2024.^
CompareCompareTerm Deposit
Minimum $10,000 deposit. No account keeping fees. Terms from 3 months up to 2 years. Interest can be paid into a different bank. Balances up to $250,000 are guaranteed by the Australian Government. Mozo Experts Choice Awards Everyday & Savings Bank of the Year winner for 2024.^
- interest rate
- 4.95% p.a.
- Minimum deposit
- $10,000.00
- Govt Deposit Guarantee
- Yes up to $250,000
- Minimum deposit
- $10,000.00
- Maximum deposit
- $5,000,000.00
- Can interest be paid to another bank?
- yes
- Automatic rollover
- yes
Read our Mozo Review to learn more about the ING Term Deposit
-
SMSF Term Deposit
5.00% p.a.
6 months$1,000
Yes up to $250,000
Apply digitally in minutes and manage your SMSF Term Deposit. Flexible cash flow management with three interest payment frequencies that suit you: monthly, yearly, or at maturity. Choose from terms of 3 months up to 5 years. No application or monthly account fees but eligibility criteria and terms and conditions apply. Only accessible to SMSFs with two or up to four individual trustees or one corporate trustee.
CompareCompareSMSF Term Deposit
Apply digitally in minutes and manage your SMSF Term Deposit. Flexible cash flow management with three interest payment frequencies that suit you: monthly, yearly, or at maturity. Choose from terms of 3 months up to 5 years. No application or monthly account fees but eligibility criteria and terms and conditions apply. Only accessible to SMSFs with two or up to four individual trustees or one corporate trustee.
- interest rate
- 4.90% p.a.
- Minimum deposit
- $1,000.00
- Govt Deposit Guarantee
- Yes up to $250,000
- Minimum deposit
- $1,000.00
- Maximum deposit
- $2,000,000.00
- Can interest be paid to another bank?
- yes
- Automatic rollover
- yes
-
Mozo experts choice awards won:
- Term Deposit - 2024
Term Deposit
5.05% p.a.
9 months$25,000
Yes up to $250,000
Enjoy flexible terms starting from 31 days up to 5 years with a Heartland Bank Term Deposit. Get your interest paid monthly (on selected terms). Your savings are protected by the Government guarantee. Minimum deposit amount of $25,000 up to $1,000,000.
CompareCompareTerm Deposit
Enjoy flexible terms starting from 31 days up to 5 years with a Heartland Bank Term Deposit. Get your interest paid monthly (on selected terms). Your savings are protected by the Government guarantee. Minimum deposit amount of $25,000 up to $1,000,000.
- interest rate
- 5.00% p.a.
- Minimum deposit
- $25,000.00
- Govt Deposit Guarantee
- Yes up to $250,000
- Minimum deposit
- $25,000.00
- Maximum deposit
- $1,000,000.00
- Can interest be paid to another bank?
- yes
- Automatic rollover
- yes
Read our Mozo Review to learn more about the Heartland Bank Term Deposit
-
Term Deposit
4.90% p.a.
6 months$1,000
Yes up to $250,000
Invest as little as $1,000 on terms from 21 days to 5 years. Open an online account in just 5 minutes. No annual or monthly account keeping fees. Flexible term options to choose from. Interest paid periodically or at maturity. Access to view your account 24/7.
CompareCompareTerm Deposit
Invest as little as $1,000 on terms from 21 days to 5 years. Open an online account in just 5 minutes. No annual or monthly account keeping fees. Flexible term options to choose from. Interest paid periodically or at maturity. Access to view your account 24/7.
- interest rate
- 4.75% p.a.
- Minimum deposit
- $1,000.00
- Govt Deposit Guarantee
- Yes up to $250,000
- Minimum deposit
- $1,000.00
- Maximum deposit
- -
- Can interest be paid to another bank?
- yes
- Automatic rollover
- yes
Read our Mozo Review to learn more about the Newcastle Permanent Term Deposit
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* Different interest rates apply to different amounts or different interest payment frequencies.
^See information about the Mozo Experts Choice Term Deposit Awards
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