- Judo Bank has hiked its five month term deposit rate 0.05%.
- The top rate is now 4.40% p.a., the highest in our database.
- Term deposit rate declines could be near the bottom if the RBA cuts rates only once more.
Five month TDs at Judo now return 4.40% p.a. for interest paid at maturity, and 4.30% p.a. for monthly payments.
The 5 basis point increase moves Judo ahead of MOVE Bank's top five month and ING's top seven month rate, both 4.35% p.a.
Term deposit returns are still well down from just a couple of months ago before the August RBA cut, but with most of the market expecting a September hold the rate of decline appears to have slowed.
According to the ASX RBA tracker 88% of the market expects the RBA will keep rates at 3.60% when it convenes on 30 September.
Economists from all of the big four banks are also in unison that a hold is likely, suggesting the Board will want to wait until the Q3 inflation numbers, set for release 29 October.
How much could you earn?
Here's what various sized deposits invested with Judo right now could return with interest paid at maturity (subject to income tax):
| Deposit size | Interest earned after five months |
|---|---|
| $1,000 | $18 |
| $10,000 | $183 |
| $100,000 | $1,833 |
| $1,000,000 | $18,333 |
Have term deposit rates bottomed out?
While a September hold appears likeliest, big four bank economists are all also predicting there will be another 0.25% cut in November, dropping the cash rate to 3.35%.
So far this cycle term deposit rates have tended to fall at a roughly commensurate rate, so returns could plunge again before the end of the year.
However, some economists including CommBank's Belinda Allen now feel a November cut is likely to be the final one.
"Further easing in 2026 remains possible but would take a deterioration in the labour market and an unsteady transition from public sector led growth to the private sector," Ms Allen said.
She said the RBA tends to move once per quarter, relying on all the economic data that comes in - a November cut would maintain this.
Ms Allen also said the RBA will likely prefer this mode of operation even despite comprehensive inflation data moving to a monthly release from October, because trimmed mean inflation will still be released quarterly.
RBA Governor Michele Bullock and the rest of the Board are generally gunshy about what they consider a 'neutral' cash rate - neither expansionary nor restrictive - but some estimates suggest that 3.35% might not be far off.
A terminal cash rate of 3.35% could mean term deposit rate drops may plateau sooner rather than later.
Already, providers like Judo Bank and Rabobank have significantly increased longer terms (one year or more) from last year.
Both banks now offer 4.30% p.a. with interest paid annually for five year term deposits.
These increased returns could be interpreted as the banks being less concerned about the risk of interest rates dropping dramatically over the next couple of years.
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Looking for a fixed term investment? Below is a selection of some of the most competitive rates on market
| 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 | – | – |
