- Commonwealth Bank has again claimed the big 4's highest term deposit rate
- Its 12-month special offer rate of 5.30% p.a. is 10 basis points clear of its rivals' highest rates
- More than two dozen banks have lifted term deposit rates in the past two weeks as they position for a higher interest rate environment
Commonwealth Bank has lifted its 12-month special offer term deposit rate to 5.30% p.a., 10 basis points clear of the best rates of other big banks.
CommBank made the same move last Friday only for Westpac, NAB, and ANZ to play catch up over the last week.
Here's a look at the big four's highest term deposit rates as they currently stand - all for 12-month deposits:
| Bank | Rate | Balance amount | Interest paid | Conditions |
| CommBank | 5.30% p.a. | $5,000 - $5m | Annually | Opened or renewed by personal or SMSF customers* |
| Westpac | 5.20% p.a. | $5,000 - $2m | Monthly, half-yearly, or annually | Existing Westpac customers opening or renewing online only* |
| NAB | 5.20% p.a. | $5,000 - $1,999,999 | Annually | - |
| ANZ | 5.20% p.a. | $5,000 - $1,999,999 | Annually | - |
(*CommBank and Westpac conditions)
This time around, CommBank has lifted the special offer rate as part of a wider hike of its term deposit rates, raising them up to 20 basis points.
Here's a look at a selection of CommBank's new term deposit rates:
| Term | Rate (% change) | Deposit amount | Interest paid |
| 7 months | 3.60% p.a. (+0.10) | $5,000 - under $50,000 | End of term |
| 8 months | 3.65% p.a. (+0.10) | $5,000 - under $50,000 | End of term |
| 9 months | 3.70% p.a. (+0.10) | $5,000 - under $50,000 | End of term |
| 10 months | 3.75% p.a. (+0.10) | $5,000 - under $50,000 | End of term |
| 11 months | 3.80% p.a. (+0.10) | $5,000 - under $50,000 | End of term |
| 12 months | 4.90% p.a. (+0.15) | $5,000 - under $50,000 | Annually |
| 24-33 months | 5.15% p.a. (+0.20) | $5,000 - under $50,000 | Annually |
Rates for deposits of $50,000 to $5 million are five basis points higher for terms under 12 months and end-of-term payments.
The 12-month rate is the same for higher deposit amounts while the two-year rate increases by five basis points to 5.20% p.a. for deposits between $50,000 and $5 million with annual interest payments.
More frequent interest payments generally attract lower rates.
Term deposit market on the boil
September has seen considerable movement in term deposit rates as banks jostle to position themselves in a rising interest rate environment.
More than two dozen banks have adjusted their rates in the past two weeks, with the term deposit market seeing several new highs.
This week, prominent players Macquarie Bank, ING, Judo Bank, and Rabobank all lifted select term deposit rates, along with a raft of smaller banks who typically offer the market's highest rates.
Here's a look at some of the highest rates currently on offer, according to the Savings.com.au database:
- 3 months - 5.25% p.a. (RACQ Bank)
- 6 months - 5.45% p.a. (RACQ Bank)
- 9 months - 5.40% p.a. (Bank First)
- 12 months - 5.50% p.a. (Bank Australia, Bank First)
- 2 years - 5.55% p.a. (Unity Bank)
- 3 years - 5.45% p.a. (Judo Bank)
- 4-5 years - 5.50% p.a. (Judo Bank)
Why is the term deposit market on the move?
The recent jump in term deposit rates is a clear signal banks are preparing for another expected cash rate increase.
Term deposit rates are set with future rate movements in mind and with a view to securing stable customer deposits as a source of funding when borrowing on wholesale finance markets threatens to become more expensive.
The recent rate increases also come at a time when government bond yields globally are at decades-long highs.
This includes Australia, the US, UK, European economic powers Germany and France, and Japan.
Analysts attribute this to growing budget deficits, heavy government borrowing, fuel costs, and ongoing inflationary pressures.
This in turn dictates higher wholesale borrowing costs for governments, banks, and other financiers.
In the current environment, term deposit rate setters will also be led to increase their own rates to compete with those offered by stable government bonds.
See also: How to buy government bonds
Currently, the benchmark Australia 10-year government bond yield is around 5.27% to 5.32%.
Two-year yields are just under the 5% mark.
However, it's also worth noting deposits up to $250,000 at authorised deposit-taking institutions (ADIs) are guaranteed under the federal government's financial claims scheme in the unlikely event a bank goes under.
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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 |
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
5.25% 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 | – | – |
