- The latest unemployment read appears to have strengthened the case for the cash rate having peaked
- With many experts anticipating cuts to begin this year, its likely 2024 will be the year of falling term deposit rates
- NAB, Suncorp, and Challenger were among those slashing term deposit rates this week
- Macquarie and Credit Union SA, on the other hand, hiked some offerings
The latest inflation and unemployment data – the latter released this week – shows the key measures seem to be running ahead of the Reserve Bank of Australia’s (RBA) schedule.
That could be good news for suffering borrowers, but term deposit enthusiasts likely see things differently.
The chances of another cash rate hike appear to have slipped further out of reach on the release, and many banks might soon slash term deposit interest rates in retaliation.
In fact, many have already begun cutting returns offered to depositors in 2024.
Australia’s unemployment rate, released on Thursday, came in at a two-year high of 4.1% on a seasonally adjusted basis for the 12 months ended January.
That was 10 basis points ahead of big bank economists’ forecasts and just 10 basis points below where the RBA expects it to be, on a quarterly basis, in June.
Data fiends will know that inflation and unemployment typically run counter to each other.
Thus, the downside inflationary surprise realised last month mightn’t be the last.
Inflation slumped to 4.1% in the December quarter, for which the central bank had tipped the read to come in at 4.5%.
ANZ senior economist Blair Chapman noted that the latest unemployment read was weaker than expected, but the bank still forecasts the first cash rate cut to come in November.
“Although as we have previously noted, the risks may be skewing to an earlier start,” he said.
So, what does that mean for Aussies hunting for new term deposit products?
Well, until without a crystal ball, it's hard to say.
However, it's probably safe to assume that term deposit interest rates will likely move in anticipation of a cash rate cut.
On that note, this week saw more term deposit rate cuts than hikes. Let's dive in.
NAB cuts numerous term deposit rates, hikes one 63 basis points
Among those posting the biggest term deposit moves this week was one of the nation's biggest banks.
NAB dropped rates on deposits with terms of between 10 and 12 months, but lifted that of its eight month product.
The chart below shows the bank’s changes in more detail:
|
Term length |
Deposit size |
Change |
New rate (% p.a.) |
Interest paid |
|
Eight months |
$5,000-$1,999,999 |
+63 bp |
4.88% |
End of term |
|
10 months |
$5,000-$1,999,999 |
-30 bp |
4% |
End of term |
|
One year |
$5,000-$1,999,999 |
-10 bp |
4.7% |
Annually |
|
One year |
$5,000-$1,999,999 |
-10 bp |
4.65% |
Semi-annually |
|
One year |
$5,000-$1,999,999 |
-10 bp |
4.6% |
Quarterly |
|
One year |
$5,000-$1,999,999 |
-0.1 bp |
4.6% |
Monthly |
Bank of Sydney cuts rates by up to 20 basis points
Once market-leader Bank of Sydney, meanwhile, cut the rate on its 13 month term deposit by 20 basis points in two shifts this week.
It started the week by dropping the offered rate by 15 basis points to 4.85% p.a. before cutting it once more to reach 4.8% p.a.
The rate on its 12 month deposit remains at 5% p.a.
Other changes made by the bank include:
|
Term length |
Deposit size |
Change |
New rate (% p.a.) |
Interest paid |
|
Six-eight months |
$1,000-$1,000,000 |
-10 bp |
4.95% |
End of term |
|
Nine months |
$1,000-$1,000,000 |
-10 bp |
5% |
End of term |
|
10-11 months |
$1,000-$1,000,000 |
-10 bp |
4.8% |
End of term |
|
13 months |
$1,000-$1,000,000 |
-5 bp |
4.8% |
End of term |
Suncorp Bank reduces term deposit rates by 10 basis points
Queensland giant Suncorp dropped the interest rates offered on its seven and 12 month term deposit products this week.
The bank offers different rates for different deposit sizes, with its advertised 12 month rates now as follows:
|
Term length |
Deposit size |
Change |
New rate (% p.a.) |
Interest paid |
|
One year |
$5,000-$99,999 |
-10 bp |
4.85% |
Annually |
|
One year |
$100,000-$999,999 |
-10 bp |
4.9% |
Annually |
|
One year |
$1,000,000-$1,999,999 |
-10 bp |
4.95% |
Annually |
Challenger Bank slashes market-leading term deposit rate
A notable change came from one of the market’s front runners on one year term deposits this week, with Challenger slashing its offered rate by 5 basis points.
Customers signing up to the product can now yield returns of 5.15% p.a.
That sees it lagging Qudos and G&C Mutual Bank, which each boast rates of 5.20% p.a. on 12 month term deposits.
Though, Challenger's six month term deposit still offers a rate of 5.20% p.a., perhaps reflecting the expectations of many experts who forecast rate cuts before year’s end.
Macquarie Bank hikes six month term deposit by 5 basis points
In better news, institutional giant Macquarie Bank hiked its advertised rate on six month deposits by 5 basis points.
Those signing up to a new six month deposit with Macquarie can now realise a return of 4.8% p.a.
Credit Union SA posts this week’s biggest rate hike
Over at Credit Union SA, savers can celebrate even harder.
New deposits at the mutual bank can now realise ‘five from five’ - 5% p.a. interest rate on a five month term deposit.
Credit Union SA hiked the rate on its five month term deposit product by a full percentage point this week.
Though, it also cut the rate offered by its 12 month term deposit by 20 basis points to 4.8% p.a.
Other movers
Other term deposit interest rate changes occurring in the week of 12 February to 16 February included:
- Beyond Bank cut term deposit rates by up to 20 basis points
- Bank First dropped term deposit rates on certain products by 10 basis points
- Gateway Bank hiked rates on one year term deposit by 10 basis points to 5.05% p.a.
Image by Ussama Azam on Unsplash
