Surprise hikes among general downward trend for term deposit rates
As the savings account onslaught continues, term deposit rates are also quietly slipping after the RBA's latest cut.
This week saw several major cuts, including Gateway Bank's previous top six month rate alongside big names like AMP Bank.
The TD market is now well into the downward cycle, with rates above 4.50% p.a. all but vanished - let alone 5%.
But there were also a couple of surprise rate hikes this week that might inspire hope the bottom of this cycle won't be as deep as the trend suggests.
AMP Bank and Bank of Sydney both boosted select rates this week, and interestingly both products that had returns increased were for longer terms than six months.
It remains unclear how many more RBA cuts will come in the next 18 months or so - predictions range from one to four - but an uptick in longer term rates might suggest some TD providers will be prepared to eat into their margins to compete on rates.
Either that or they think the pendulum will swing the other way - i.e. rates upwards - in the next few years.
Still, if you're on the hunt to lock in a TD the general trend is very much downwards so it pays to compare and be on your toes.
Here were the major rate changes in the week ending 22 August:
Gateway Bank cuts top six month rate
Although several other banks also cut six month rates this week, the 0.05% cut from Gateway Bank could be the most significant for TD fans.
Gateway drops its top six month rate from 4.40% p.a. to 4.35% p.a., back level with the other highest six month rates in the Savings.com.au database.
It means there are now just a handful of term deposit products on the Australian market with a rate of 4.40% or higher - Judo at 4.40% for seven months and MOVE Bank's 4.45% p.a. for five months are two of the few hold outs.
With its three month rate unchanged at 4.30% p.a., Gateway remains level with the top returns on market there too.
AMP Bank varies rates
| Term length | Deposit size | Payment frequency | Interest rate (change) |
|---|---|---|---|
| Three months | $25,000+ | End of term | 3.85% p.a. (-0.35) |
| Six months | $25,000+ | End of term | 4.15% p.a. (-0.15) |
| Seven months | $25,000+ | End of term | 4.05% p.a. (+0.15) |
| One year | $25,000+ | End of term | 3.90% p.a. (-0.05) |
| Two years | $25,000+ | End of term | 3.60% p.a. (-0.10) |
AMP cut most of its term deposit returns this week including its top six month rate, down 15 bps to a maximum of 4.15% p.a.
However, the most notable change was in the opposite direction with seven month returns up by the same amount to now also sit above the 4% mark.
AMP has a wider TD range than most - there's a big range of possible term lengths and discounted rates for deposits under $25,000 or in exchange for more frequent interest payments.
Bank of Sydney hikes one year, cuts six months
| Term length | Deposit size | Payment frequency | Interest rate (change) |
|---|---|---|---|
| Six months | $1,000+ | End of term | 4.25% p.a. (-0.10) |
| One year | $1,000+ | End of term | 4.00% p.a. (+0.05) |
Bank of Sydney was another to cut back its six month rate last week.
Previously level with the likes of MOVE Bank at 4.35% p.a., the highest six month rate in our database, Bank of Sydney's product was cut down to a top rate of 4.25% p.a.
At the same time though its one year rate was hiked by 0.05% to 4% p.a., joining the dwindling number of one year products with a rate starting with a 4.
Other movers
- Teachers Mutual Group cut rates by up to 15 bps, including its top six month rate which drops to 4.20% p.a.
- Summerland Bank, QBank, Beyond Bank, The Mac, Community First and First Option Bank all also reduced term deposit rates.
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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 | – | – |
