The top five-year TD rate at Judo is now 5% p.a. after a 20 basis point increase, while it's also now at 4.75% p.a. for two-, three-, and four-year terms.
It moves the digital bank further ahead of the field - the bank with the next highest TD return in the Savings.com.au database remains Rabobank's 4.70% p.a. for five-year terms.
Term deposit rates are heading north across the board as expectations grow that the cash rate will remain higher for longer, but it's longer term rates in particular that are seeing significantly boosted returns.
Market expectations are currently for the cash rate to be increased again to sit above 4% and remain there until beyond June 2028, and banks are seemingly confident enough in the outlook to offer higher returns to attract more deposits.
Latest term deposit rates from Judo
Term length Deposit size Payment frequency Interest rate (change) Two years $1,000-$2,000,000 Annually 4.75% p.a. (+0.25) Three years $1,000-$2,000,000 Annually 4.75% p.a. (+0.35) Four years $1,000-$2,000,000 Annually 4.75% p.a. (+0.10) Five years $1,000-$2,000,000 Annually 5.00% p.a. (+0.20) These products are also available with monthly interest payments, but with a 10 basis point discount.
How much higher will rates go?
It's been an exciting couple of months for term deposit fans, and with three of the big four banks predicting another rate hike in May there may be plenty of savers holding off in the hope rates continue to climb.
In mid-2023, six-month TD rates briefly hit 5.50% p.a. while the cash rate was at 4.10% p.a. and most analysts were expecting at least another hike (which eventually materialised).
One more hike in 2026 would take the cash rate back to 4.10% (assuming a standard 25 basis point increase), but movements beyond that will likely be dependent on the data for inflation, growth, and the labour market.
Contrary to the 2023 peak, six-month rates are lagging well behind longer term rates at the moment, with the top return for a six-month period in the Savings.com.au database currently 4.50% p.a. (AMP Go).
Back then, it was expected a prolonged hold with the cash rate at its peak would be followed by an extended cutting cycle once inflation moderated, and the terminal cash rate expected to be near or even below 3%.
Now though, given the concerns about the economy's capacity to grow without causing inflation, it appears there's a higher floor for the cash rate than previously thought.
That means banks may be more confident there won't be a steep drop in the cash rate in the medium term and therefore happier to offer stronger returns on longer term deposits, while shorter term rates may not reach the highs of 2023 unless expectations shift about future rate hikes.
The current trend suggests TD rates (longer terms in particular) may keep going up for a little longer.
However, savers should keep in mind that some banks appear to be strategically offering strong rates until they secure some amount of customers, before dropping rates once more.
A recent example of this may be Commonwealth Bank, which trimmed its top two-year rate by five basis points on Tuesday (for balances up to $50,000) - only one week after boosting it by 20 basis points.
How much could you earn with a 5% term deposit rate?
As of 10 February, a five-year term deposit with Judo Bank at 5% p.a. could generate the following returns (subject to income tax) for various sized deposits:
| Deposit size | Annual return | Total earnings |
|---|---|---|
| $1,000 | $50 | $250 |
| $10,000 | $500 | $2,500 |
| $100,000 | $5,000 | $25,000 |
| $1,000,000 | $50,000 | $250,000 |
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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 | – | – |
