Interest rates for personal term deposit accounts have been plummeting for several weeks with CommBank, NAB, and ANZ among more than 30 banks who've cut at least one of their term deposits.
The cuts have been hefty with CommBank and NAB cutting almost all their term deposit rates by 50 basis points and ANZ by up to 80 basis points.
During this market plunge, term deposits for business accounts have remained relatively unscathed but on Friday, CommBank and ANZ have moved to slash those rates too.
CBA business TD cuts
CommBank moved first with an early morning announcement that a large swathe of its business term deposits will see interest rate cuts of up to 40 basis points, although some will see rates lifted.
CommBank's Business Investment Account rates for amounts between $5,000 and $1,999,999 will fall for terms from three to 11 months, although the rate for nine months will jump 50 basis points to 4.50% p.a., paid annually.
The rate for 12-23 month terms has also risen 15 basis points to 4.40% p.a. while rates for longer terms have all been cut.
The pattern is the same for term deposits paid semi-annually with hikes to the nine and 12-23 month rates and falls across the board for the rest.
The biggest hike is 60 basis points to 4.50% p.a. for Business Investment Account term deposits invested for nine months with interest paid monthly.
ANZ joins business TD cuts
ANZ made its announcement shortly after, cutting some of its Business Notice Term Deposit rates by up to 50 basis points.
The rate for amounts between $5,000 and $99,999.99 invested for six months has been cut by the full 50 basis points.
The new rates are:
| Term length | Deposit amount | Payment frequency | Interest rate (Change %) |
|---|---|---|---|
| Six months | $5,000-$99,999.99 | End of term | 3.6% pa. (-0.5) |
| Six months | $5,000-$99,999.99 | Quarterly | 3.58% p.a. (-0.5) |
| Six months | $5,000-$99,999.99 | Monthly | 3.57% p.a. (-0.5) |
Twelve-month term deposits have been cut by 24-25 basis points:
| Term length | Deposit amount | Payment frequency | Interest rate (Change %) |
|---|---|---|---|
| 12 months | $5,000-$99,999.99 | Annually | 4.25% p.a. (-0.25) |
| 12 months | $5,000-$99,999.99 | Semi-annually | 4.21% p.a. (0.24) |
| 12 months | $5,000-$99,999.99 | Quarterly | 4.18% p.a. (-0.25) |
| 12 months | $5,000-$99,999.99 | Monthly | 4.17% p.a. (0.24) |
Business TDs follow consumer rates lower
Term deposit rates have been dropping across the board since reaching their recent peaks from a couple of months ago, when the highest rate hit 5.40% p.a.
Many of the major banks and other deposit takers have now cut all TDs below the 5% mark.
Currently, Australian Unity Bank offers the highest rate at 5.10% for six-month terms, while ING has the next highest at 5.05%, also for six months.
This week, Bendigo Bank and Bank of Queensland joined the downward trend with Bendigo cutting 12 month and longer terms by up to 70 basis points.
BoQ's biggest cut was 90 basis points to 3.3% p.a. for its two-year rate for amounts between $5,000 and $250,000, paid annually.
No resurgence on the horizon
The cuts to term deposit and some home loan rates reflect conditions on the global market which is pricing in anticipated interest rate cuts in many developed countries, particularly the US.
Many banks raising their money on the wholesale funding market are now seeing lower rates and passing these on to their retail and business customers accordingly.
For bank customers enjoying high TD rates in recent times, it's unlikely rates will return to their peaks unless there's a major shift in market expectations.
Image by Adeolu Eletu on Unsplash
