Banks adjust term deposit rates, largely to the disappointment of savers

CommBank, Australia's largest bank, made various interest rate moves on its term deposit products, a few days before the RBA meets for the first time this year to decide on which direction the cash rate goes.

With inflation moderating faster than anticipated, economists tipped cash rate cuts to begin in the second half of 2024, with a hold predicted for next week. 

“The Q4 2023 CPI indicated that more progress has been made in returning inflation to target than the RBA expected when it published its inflation forecasts in November,” CommBank head of Australian economics Gareth Aird said. 

As such, CommBank reiterated its forecast of an easing cycle commencing in September.

Mr Aird pegged the cash rate to sit at 2.85% by the second half of 2025, after two cycles of 75 bps cuts he expects to occur this year and in the first half of next year. 

However, the major bank is not ruling out the possibility of RBA keeping the tightening bias for a little longer until further progress on inflation has been made towards the target band. 

“The risk of course is that the board shifts to a neutral bias. If that were to be the case, then it would signal the board is closer to cutting the cash rate than we suspect they are,” Mr Aird said.

Speculations will be over once RBA makes their announcement on 6 February. In the meantime, these are banks that have adjusted their term deposit rates this week: 

CommBank varies term deposit rates

The Commonwealth Bank of Australia adjusted some of its standard term deposit products – either lowering or hiking rates offered by 5 basis points. 

Following this week’s changes, interest rates of the bank's short-term (seven months and eight months) deposit products, which previously had the same rates, are now 10 basis points away from each other. 

While CommBank also slashed the rates of its deposit products with two-year maturity, it kept its one-year term deposit untouched at its current standard rate offering of 4.25% p.a.

ING moves rates down

ING’s term deposit rates are slowly slipping down from their market-leading rates as we inch closer to the RBA’s monetary policy decision.

Customers looking for a one-year term deposit within the 5% p.a. range might want to take advantage of ING’s offering as this may further slip after it did again by 10 basis points this week. 

Macquarie Bank trims down rates

Australia’s fifth-largest lender slashed its term deposit rates by 5 basis points. 

Macquarie’s latest adjustment has reverted its one-year deposit product to its rate at the end of 2023. It also reduced payments made to customers of three-to-five-year term deposits to 4.35% p.a.

Judo Bank wields the axe again

Judo Bank has walked further away from its once-market-leading offering after dropping the rates on its term deposits for the third consecutive week. 

The challenger bank made another 10-basis point cut on its one-year term deposit, bringing it down to 5.05% p.a. Its current rate is now 30 basis points below when Judo Bank offered the top rate, albeit short-lived, for this product in December. 

Judo Bank also lowered rates on deposits ending on shorter and longer terms with a maximum change of 15 basis points. 

Here are the interest rate changes to its term deposits paid at maturity:

Westpac Group lifts special offer term deposit rates

While several players are slashing and marginally increasing term deposit rates, three of Westpac Group's business banks bolstered the special offer rates on its eight-month term deposits by up to 98 basis points. 

Available for a limited time at St. George, Bank of Melbourne, and BankSA, the term deposit product offers existing customers 4.88% p.a., which they can further boost by 10 bps to 4.98% p.a. when they renew online. 

Bank of Sydney's one-year term deposit also down

Bank of Sydney has joined other players in cutting down rates offered for one-year term deposits after it slashed its product by 15 basis points to 5.00% p.a. this week. 

The bank also dumped the rates on its 10- and 11-month term deposits by as much as 20 basis points, leaving them at 4.90% p.a. 

Following these adjustments, the highest standard rate currently available at the Bank of Sydney is 5.10% p.a. on nine-month terms. 

Other movers this week:

• Bank of Queensland (BOQ) lowered one-year term deposits by 5 bps, while hiking the rates on its four-month deposit by 20 bps 
• ME Bank cut rates on its one-year term deposit by 5 bps 
• Firstmac (issued by Goldfields Money) slashed rates on its six-month term deposit by 10 bps
• The Mutual Bank varied rates up to 120 bps
• Newcastle Permanent upped six-month TD by 50 bps and lowered one-year and longer TDs by as much as 25 bps
• Greater Bank Limited varied rates up to 25 bps
• Regional Australia Bank varied rates by up to 40 bps
• RACQ Bank varied rates by up to 15 bps

Read more: Term Deposit News

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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