Term deposits continued their descent in March, but things took an interesting turn following the second RBA cut when CommBank, NAB and Westpac decided to raise rates for select terms by as many as 65bp. Since then, many of the smaller banks have announced rate hikes of their own to stay competitive. All told, average term deposit rates fell between 9 and 22 bp across all terms, save for the 12 month average which stayed steady.
It bears mentioning that most of these decisions are being applied to terms of one year or less. While this might provide some interest income security for a little while, it won’t be much help in the long run as it’s very likely we'll be looking at an extended period of low interest rates that could last for quite a few years.
For those looking to lock away their savings for more than a year, providers like Judo Bank and Rabobank are well worth considering. Judo Bank offers rates of at least 2.00% p.a. across all available investment options, with rates as high as 2.15% p.a. on one year and five year terms. Meanwhile, the Rabobank five year term deposit offers rates of 2.25% p.a., making it a worthwhile option for those who are comfortable parting with their savings for a lengthier period of time.