CommBank pumps six-month term deposit rates, cuts two-year rates
- Commonwealth Bank has given a major boost to its six-month term deposit interest rates
- At the same time, it has lowered its two-year rates
- It joins a raft of banks moving longer-term term deposit rates lower
Australia's biggest bank has lifted its six-month term deposit rate to 4.50% p.a., boosting the old rate by up to 105 basis points.
The new rate applies to deposit amounts from $5,000 to $5 million with interest paid at maturity while monthly payments see the rate drop to 4.45% p.a.
But even with the significant boost, CommBank's rate remains well under the market's best six-month rate of 5.40% p.a., offered by Gateway Bank on deposits of $1,000 or more.
Heartland Bank matches the rate but for minimum deposit amounts of $10,000.
See also: Compare 6-month term deposit rates
CommBank's new rate also falls well short of its current six-month limited time special offer deal of 5.10% p.a. for existing personal and SMSF customers.
Giving and taking away
At the same time as boosting six-month rates, CommBank has also sliced 25 basis points off its two-year rates.
Its best new two-year rate drops to 5.00% p.a. for deposit amounts from $50,000 to $5 million with interest paid annually.
The two-year rates drop below the 5% mark for smaller deposit amounts and more frequent interest payments.
Term deposit rates heading lower
CommBank joins the recent trend that's seeing longer-term rates being cut across the term deposit market.
Last week, the Westpac Group (including St George, Bank of Melbourne, and BankSA) sliced up to 60 basis points off its one to three year rates.
On Wednesday, Rabobank slashed the market's previous leading rate of 5.70% p.a. by 50 basis points to 5.20% p.a.
That was for a five-year deposit of amounts more than $500,000 up to $2 million and was part of broader cuts to Rabo's term deposit product range.
Macquarie Bank also cut its one-year rates on Wednesday, shaving them by five basis points to pay 5.20% p.a. for a 12-month deposit of between $5,000 and $1 million.
The rate drops to 5.05% p.a. for deposits over $1 million, both with end-of-term interest payments.
Markets preparing for lower rate future
Term deposit rates typically move in line with bond yields, which are generally around future cash rate expectations.
Given longer-term rates are falling, this signals markets are preparing for a lower interest rate environment in the near term.
This aligns with the forecasts of three of the big four banks' economists who are predicting the cash rate will remain on hold until the first potential rate cut towards mid-2027.
Westpac remains the outlier with its forecast of one, possibly two, more cash rate hikes in 2026 with no cuts until 2028.
It's worth noting while rate-setters are guided by the forecasts of their in-house economists, they also take other factors into account including external data, market sentiment, and competitive positioning.
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Want to earn a fixed interest rate on your cash? The table below features term deposits with some of the highest interest rates on the market for a six-month term.
| Bank | Term Deposit | Interest Rate | Interest Frequency | Term | Automatic Rollover | Maturity Alert | Early Withdrawal Available | Minimum Deposit | Maximum Deposit | Notice Period to Withdraw | Account Keeping Fee | Online Application | Joint Application | Tags | Features | Link | Compare | Promoted Product | Disclosure |
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
5.35% p.a. | At Maturity | 6 months | $5,000 | $19,999 | – | – | |||||||||||||
5.20% p.a. | At Maturity | 6 months | $10,000 | $5,000,000 | – | – | |||||||||||||
5.15% p.a. | At Maturity | 6 months | $1,000 | $1,000,000 | – | – |
