New term deposit market-leaders emerge amid predictions of cash rate hikes

A flurry of movement kept term deposit enthusiasts on their toes this week.

Rabobank, Westpac subsidiaries, and former-market leader Credit Union SA all updated their term deposit pricing, with customers seeking longer terms the clear winners. 

The changes come as Judo Bank chief economic advisor Warren Hogan hits headlines with predictions of as many as three cash rate hikes in 2024. 

And there's more folks. The highest rate that was available on the market last week is no more, with another bank striding out to take the lead.

So, we're officially starting a new month in a new term deposit landscape. Let's dive into the changes you need to know about. 

Australia’s highest term deposit rate slashed

If you were holding out on entering a seven-month term deposit with Credit Union SA, we’ve got bad news for you.

Returns on the distinct product were slashed this week, cut from a whopping 5.25% p.a. to just 4.30% p.a. – a 95 basis point drop. 

Great Southern Bank picks up slack to post new top rate

Fortunately for term deposit enthusiasts, the hole in the top end of the market was quickly filled by none other than Great Southern Bank.

It upped the rate on its six-, nine-, and 12-month term deposits paying interest at end of term to 5.20% p.a. – representing hikes of 20 to 25 basis points. 

That sees it in line with what were the highest offerings on the market, with Challenger Bank previously leading with its promise of 5.20% p.a. on its six-month deposit product.

In other news, Challenger Bank rebranded this week to Heartland Bank after an acquisition by the brand most commonly associated with reverse mortgages.

Of course, Kiwis will be familiar with the brand already, it being a New Zealand institution and all. It was the first Kiwi institution to obtain an Aussie banking licence.

But there's a better rate out there for Aussies aged over 55 years.

Great Southern Bank also increased the rate on its one-year Platinum Plus 55+ product by 20 basis points, launching it to 5.30% p.a. for those receiving interest at end of term.

It's the first time in a while that we've seen those sort of returns on the table. 

Rabobank hikes term deposit rates by up to 40 basis points 

There was more big news in the term deposit space this week.

The bank behind the nation’s highest savings account interest rate – 5.75% p.a. for the first four months – is also now leading the way when it comes to five-year term deposits. 

Those signing onto a 60-month term deposit through the agriculture bank can realise a return of 5.10% p.a.

That has the potential to be noteworthy if cash rate cuts begin later this year – as each of the big four banks predict. 

Though, if the cash rate is hiked such a rate could be soon left in the dust of other providers.

Other Rabobank term deposit moves made this week include:

Judo Bank hikes by up to 25 basis points & predicts cash rate to hit 5.1%

If you’ve seen Judo Bank, or more specifically its chief economic advisor Warren Hogan in headlines this week, here’s why.

The veteran economist has broken stride with the consensus and now believes there could be as many as three cash rate hikes in 2024, potentially taking the cash rate to more than 5%. 

The Savings Tip Jar podcast caught up with the contrarian commentator this week, giving them this explanation for his reasoning: 

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Amid all this, the once-market leader took the chance to hike its term deposit rates. 

While far from the 5.35% p.a. rate it once offered on 12-month term deposits, the bank’s new two-year return of 5.10% p.a. is respectable. 

Indeed, it’s just 10 basis points below the market-leading rate offered by Challenger Bank – oops, I mean Heartland Bank – on six-month term deposits. 

Judo Bank also increased the rate on its three-month deposit product by 5 basis points to 4.90% p.a. And that of its four-to-five-year deposits by 15 basis points to 5.10% p.a. 

Westpac subsidiaries & Heritage Bank shake up niche deposit rates 

Another term deposit niche saw major changes this week, with multiple banks shifting rates on farm management term deposit products. 

These accounts are different in that they allow primary producers to make tax-deductible deposits in good years and withdraw it during bad times. 

The agriculture departments of Westpac subsidiaries BankSA, Bank of Melbourne, and St George each hiked rates on one-year farm management term deposits by 40 basis points to 4.90% p.a. 

Meanwhile, Heritage Bank dropped its rates on the niche products by up to 60 basis points.

It now offers returns of 4.20% p.a. for one-year deposits and 3.50% p.a. for two-year deposits. Both rates are for deposits paying interest at end-of-term. 

Other movers

• BCU Bank increased rates on three-month term deposits by 20 basis points to 4.50% p.a. 
• Teachers Mutual Bank Group hiked rates on three-month term deposits 125 basis points to 4.75% p.a. and six-month term deposits 65 basis points to 4.65% p.a.   
• Westpac Group brands BankSA, Bank of Melbourne, and St George hike 12- to 23-month term deposit rates by 40 basis points to 4.80% p.a. for a limited time

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Brooke Cooper

Finance Journalist

Brooke Cooper joined the InfoChoice Group in 2023. She previously wrote for the Motley Fool, covering topics such as share prices, companies, and IPOs. With interests in everyday finance and wealth, Brooke is passionate about educating Aussies - especially young adults - on all things money.

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