Macquarie and UBank both drop term deposit rates

William Jolly By on March 11, 2019
UBank Macquarie drop term deposit rates

Macquarie Bank and UBank have cut term deposit interest rates on various terms by up to 15 to 20 basis points.

Macquarie Bank reduced a variety of its term deposit products by as much as 15 basis points on selected term deposit products ranging in length from one month to five years.

NAB-owned digital bank UBank cut rates on its one-month to 12-month term deposits, with the highest rate change being a 20 basis point decrease.

This is just the latest in a string of rate movements from major providers, with NAB also dropping interest rates by up to 20 basis points last week.

Over the past few weeks, ANZ & Commbank have dropped rates, as have Greater Bank, Heritage Bank and The Mutual.

UBank: key changes

A lot of UBank’s changes were made to SMSF deposits, which we haven’t included in this table.

Some of the changes on common term lengths can be seen below.

TermOld interest rateChangeNew interest rate
One month2.1%-0.21.9%
Three months2.7%-0.12.7%
Six months2.75%-0.12.65%
Nine months2.75%-0.12.65%
Twelve months2.75%-0.12.65%

Macquarie Bank: key changes

Macquarie Bank had more changes made to its term deposit products than UBank.

Now, customers can actually get a higher rate with shorter term deposits than they can with long term deposits, which is unusual.

TermOld interest rateChangeNew interest rate
Six months2.75%-0.052.70%
Nine months2.75%-0.052.70%
One year 2.80%-0.12.70%
Three years2.70%-0.152.55%
Five years2.70%-0.152.55%

How do these term deposits compare to the rest of the market?

The answer to this question depends on the term being looked at, but both UBank and Macquarie’s rates are still fairly competitive – less so than they were before slashing their rates.

Both institutions now boast interest rates of 2.75% p.a. and 2.80% p.a. for one-year term deposits respectively.

But some other providers offer rates as high as 2.85% p.a. on one year deposits.

For five-year term deposits, Rabobank is offering (at the time of writing) interest rates as high as 3.20% p.a., compared to Macquarie’s 2.70% p.a.

Why get a term deposit at all?

Compared to other investment options, such as shares and property, a term deposit could offer more stability.

Deposits generally have a near-guaranteed rate of return compared to riskier investments, even if these returns are low, and are protected by a government guarantee worth up to $250,000 per institution.

But interest rates are heavily influenced by the cash rate, which is at an all-time low at the moment.

Term deposit rates generally move with the cash rate, as seen in the graphic below.

According to the chief economists from both NAB and Westpac, the cash rate could fall not once but twice by the end of 2019.

Should the cash rate fall by 50 basis points, the average deposit interest rate would also likely fall by a similar amount.

But term deposit rates are fixed, meaning they don’t change at all until the end of the chosen term.

By locking in a term deposit now, customers could avoid these potential drops in interest rates (but can also miss out on future rises).

For feedback or queries, email

Photo by Lance Asper on Unsplash

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William Jolly
William Jolly joined as a Financial Journalist in 2018, after spending two years at financial research firm Canstar. In William's articles, you're likely to find complex financial topics and products broken down into everyday language. He is deeply passionate about improving the financial literacy of Australians and providing them with resources on how to save money in their everyday lives.
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