Term deposit rates may have hit their peak after Australia’s big four banks cut their top offers in a 24-hour cull.
CBA and ANZ cut their highest term deposit rates yesterday morning, while this morning, it was Westpac and NAB’s turn to pair back their highest fixed savings rates.
Changes to the big banks’ highest term deposit rates this week | ||
|---|---|---|
Change %-pts | Highest rate | |
CBA | -0.10 | 5.15% for 12 months |
Westpac | -0.05 | 5.20% for 12 months |
NAB | -0.10 | 5.15% for 12 months |
ANZ | -0.05 | 5.25% for 12 months |
Source: Canstar. Note: Deposit amounts and other conditions apply. Westpac rate requires customers to open or renew online.
The big banks aren’t the only ones shifting down a gear on term deposits.
Canstar analysis shows 16 banks cutting at least one rate since the start of the month (August), including challenger banks Macquarie and AMP.
Banks that have cut at least 1 term deposit rate since 1 August:
- AMP Bank
- ANZ
- Australian Military
- Bank First
- Bank of Sydney
- Bank Vic
- CBA
- Credit Union SA
- Gateway Bank
- GMCU
- Heartland
- Macquarie
- NAB
- Southern Cross
- The Mutual
- Westpac
Source: Canstar
Have term deposits passed the peak?
Whether or not term deposit rates have now passed the peak will depend on whether the RBA hikes again.
However, all four big banks believe the cash rate has now peaked and that the next move from the RBA will be down, albeit in 2027.
This expectation is playing out across term deposit rates, which are now starting to shift down as banks price in the possibility of cuts within the next year.
Source: Canstar, RBA. Notes: Based on term deposits on the Canstar database with a deposit amount of $25k. Excludes accounts paid monthly or quarterly.
What is a decent term deposit rate now?
Out of the big four banks, ANZ now offers the highest rate at 5.25% for a 12 month term. However, the big four banks’ highest term deposit rates are well behind the market leaders.
Canstar shows the highest term-deposit rate on the database is 5.55% from both Defence Bank for a 10-month term and Unity Bank for a 2-year term.
Highest term deposit rates | |
|---|---|
Highest rate | |
Defence Bank | 5.55% for 10 months |
Heartland, MOVE Bank | 5.40% for 12 months |
Unity Bank | 5.55% for 2 years |
Judo Bank | 5.50% for 5 years |
Source: Canstar. Note: Deposit amounts and other conditions apply.
How term deposits stack up against high-interest savings accounts
Canstar analysis shows high-interest savings accounts are neck-and-neck with term deposits, but awash with monthly conditions and caveats some could do without.
The highest ongoing savings rate on the database is currently 5.75% – 0.20 higher than the highest term deposit rate. However, this at-call savings account is reserved for those aged 18 to 40.
The highest ongoing savings rate for all adults for deposits of over $25,000 is currently 5.50%, 0.05 lower than the highest term deposit rate.
Highest ongoing savings rates on Canstar | ||||
Bank | Max rate | Max balance | Monthly conditions | Rate if not met |
Westpac ages 18-40 | 5.75% | $150k | Make 20+ purchases on linked bank acct + grow savings bal | 0.10% |
MOVE Bank | 5.65% | $25k | Deposit $200+ into savings and no withdrawals | 0.10% |
BOQ | 5.60% | $50k | Deposit $1k+ and make 5+ purchases in linked bank acct | 0.05% |
ING | 5.50% | $100k | Deposit $1k+ and make 5+ purchases in linked bank acct, plus grow savings balance. | 0.01% |
Source: Canstar. Note: Deposit amounts and other conditions apply.
Canstar data insights director, Sally Tindall, says, “It’s been a term deposit rate-cutting frenzy from the big four, with each taking the knife to their highest term deposit rates in the space of just 24-hours.”
“It’s not just the big banks cutting either. Rate tracking by Canstar shows a total of 16 banks have moved their term deposit rates south since the start of this month.
“The question for savers canvassing their options is whether these rates have now peaked. Certainly the big bank economic teams believe the cash rate won’t go any higher in this cycle, and that the next move from the RBA will be down, albeit next year.
“The RBA, however, hasn’t given Australians the same level of certainty. Governor Bullock has made it clear the Board is still watching the inflation and unemployment data closely and will raise rates if needed.
“Yesterday’s labour force figures add another layer to the mix. Unemployment ticked up to 4.5 per cent in July, which is a sign that the labour market is starting to soften under the current cash rate pressure. However, inflation is still running well above the RBA’s target and another hike could still be waiting in the wings. Certainly, that’s what the Governor believes could happen.
“This puts savers in a rock and a hard place. The economy is slowing, but inflation hasn’t been beaten, so it’s far too early to assume the next move in the cash rate will be down.
“For savers who want certainty and don’t need access to their money, a term deposit can still make sense. Just know these rates are starting to slide, at least for now.
“For those who want greater flexibility, a high-interest savings account may be the more practical option.
“Regardless of which avenue you pick, set aside some time to read the fine print.”
