Banks slash term deposit rates leaving top rates behind

NAB led this week’s droppers amid sustained expectations for the RBA to lower the cash rate in the third quarter, at the earliest. 

Perhaps nothing has been forecasted a lot as much as the Reserve Bank finally easing its monetary policy after jacking up the rates since May 2022, especially as current datasets point to a slowing economy. 

However, major bank economists believe the weak GDP result in the December quarter is not enough to pressure the Board to wield the axe earlier than expected. 

“The RBA meets later this month, and we don’t think it will be swayed by the soft GDP data, with growth of just 0.2% in Q4,” ANZ researchers said. 

RBA, in its latest Statement of Monetary Policy, forecast the economy to grow 0.3% over the three months to December.

“We suspect it will instead note that annual growth of 1.5% y/y was in line with its forecast.”

NAB senior economist Taylor Nugent noted that despite below-trend growth and subdued household spending, “real income squeeze on households is easing”.

“It will take some time for the RBA to be comfortable that progress is translating into sufficient progress on domestic inflation pressures.”

Although with consumer spending slowing to a crawl – only 0.1%, far below RBA’s 1.1% forecast made in Q4 – experts expect a moderation in demand-driven inflation would keep the central bank on track to cut rates around mid-2024.  

If correct, the cash rate will be down in a few months. But while we wait, these term deposit providers have gone ahead dropping rates. 

NAB slashes term deposit rates 

National Australia Bank (NAB) left its big four peers in offering a top rate of 4.88% on eight-month term deposits after slashing its own by 88 basis points (bps). 

Just three weeks ago, NAB hiked the rate on the said term deposit product by 63 bps. 

But with the bank tipping a November start to RBA rate cuts – which is eight months away – this week’s move might be its way of avoiding the risk of being locked into paying top rates once the easing cycle begins.

Similarly, NAB also dropped the rates on its longer-term deposits by 20 bps.

ING further moves rates down

For the third time this year, ING cut the rates offered on its one-year term deposits, bringing it down to 4.90% p.a. or 40 basis points below its 5.30% p.a. rate before the year began. 

The bank’s term deposit ending on a two-year term also received its third rate cut this year, while the shorter 90- and 120-day TDs saw their rates drop for the first time this week.

Here are the changes and new rates of ING’s term deposits paying at maturity:

Firstmac hikes 6-month term deposit to near market-leading rate 

Firstmac upped its six-month term deposit by 10 basis points this week, bringing it close to market-leading rates. 

Offering customers 5.00% p.a., the institution’s six-month TD is now only 10 bps below the current top rate offered by Bank of Sydney and Challenger Bank. 

It also hiked the interest rate on its one-year term deposit by 5 basis points to 4.95% p.a.

Firstmac, as a non-bank lender, offers white-labelled term deposits issued by Goldfields Money. 

G&C Mutual Bank leaves top-rate behind

After this week’s adjustments, G&C Mutual Bank has stepped down as the market leader in nine-month and one-year deposits with rates down from 5.20% p.a. to 5.00% p.a. and 5.05% p.a., respectively. 

It also applied the slasher across its products, ranging from nine months to three years. 

Challenger Bank boosts term deposit rates, dethrones previous market leaders

Challenger Bank boosts rates this week to emerge as the new market leader for nine-month deposits. 

With G&C cutting its nine-month TD rate, Challenger Bank’s offering, which went up 5 bps this week, now holds the top rate title at 5.15% p.a.

And by not moving its one-year term deposit as G&C did, Challenger Bank now solely offers the current market-leading rate of 5.20% p.a. on deposits with a one-year term. 

BOQ moves rates up

Bank of Queensland applied varying increases to its six-month, nine-month, and one-year term deposits to bring their rates up to 4.80% p.a.

Other movers this week:

• Macquarie Bank lowers six-month term deposit rates by 5 basis points
• Great Southern Bank varies term deposits by up to 40 basis points
• Summerland Bank cuts fixed term deposits by up to 40 basis points 
• Bank Australia ups six-month term deposit and lowers one-year by 5 basis points
• Illawarra Credit Union hikes rates by as much 145 basis points

Read more: Term Deposit News RBA Big 4 Term deposit rate changes

Bernadette Lunas

Finance Journalist

Bernadette is a journalist with years of experience covering topics in macroeconomics, real estate, and lifestyle beats for notable print media organisations. She joined the InfoChoice Group in 2024, bringing her passion for writing stories that help Australians make better decisions about money.

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