It was a relatively quiet week for term deposit rate changes ahead of next Tuesday's monetary policy decision.
Most observers agree the RBA board are unlikely to alter the cash rate, with a 95% market consensus that rates will remain at 4.35% for now.
Governor Michele Bullock has maintained the RBA will raise rates further if needs be, but given soft GDP growth and rising unemployment, it would likely take a substantial shock for the inflation outlook to go up enough to need further hikes.
Economists from most of Australia's major banks believe rate cuts from September are a possibility.
While this means it's less likely for term deposit rates to return to the highs of 5.50% p.a, a more stable environment still could mean some providers boost rates to try to gain market share.
This week for example, Credit Union SA made a big play, offering a new market leading rate across all term deposit products in Australia (according to savings.com.au's market research).
Credit Union SA varies rates up to 80 bps
| Term length | Deposit size | Payment frequency | Interest rate (Percentage point change) |
| Five months | $5,000-$99,999,999.99 | End of term | 4.20% p.a (-0.80) |
| Seven months | $5,000-$99,999,999.99 | End of term | 5.25% p.a (+0.20) |
Credit Union SA sprung a surprise this week, with a 20 basis point hike to its seven month terms setting a new market leading standard.
No other term deposit product on the market currently returns more than 5.15% p.a, so this is likely to shake up the landscape significantly.
At Credit Union SA, the next best rate is 4.80% p.a on one year terms, so there's a clear outstanding choice among its range of products, and a slant to shorter-term investments.
Judo boosts rates 10 bps
| Term length | Deposit size | Payment frequency | Interest rate (Percentage point change) |
| Six months | $1,000-$999,999 | End of term | 5.10% p.a (+0.10) |
| Six months | $1,000-$999,999 | Monthly | 5.00% p.a (+0.10) |
One of the other eye catching rate increase this week came from Judo, which boosted six month returns by 10 basis points.
The highest six month rate at Judo is now just 5 basis points behind the market leaders Gateway Bank.
Judo offers its highest rate, 5.10% p.a, on six month, nine month and one year terms, with a 10 basis point discount in exchange for monthly interest payments.
Macquarie Bank cuts rates up to 10 bps
| Term length | Deposit size | Payment frequency | Interest rate (Percentage point change) |
| Six months | $5,000-$1,000,000 | End of term | 4.70% p.a (-0.05) |
| One year | $5,000-$1,000,000 | End of term | 4.65% p.a (-0.05) |
| Two years | $5,000-$1,000,000 | Annually | 4.35% p.a (-0.05) |
| Three/Four/Five years | $5,000-$1,000,000 | Annually | 4.25% p.a (-0.10) |
Macquarie was the largest bank to alter term deposit rates this week, with customary minor adjustments to its range of products.
The highest rate at Macquarie is for six month terms rather than longer terms, which is a common theme at the moment given the long term expectations for the cash rate.
Challenger Bank cuts rates 5 bps
| Term length | Deposit size | Payment frequency | Interest rate (Percentage point change) |
| One year | $25,000*-$1,000,000 | End of term | 5.15% p.a (-0.05) |
| Two years | $25,000*-$1,000,000 | End of term | 4.70% p.a (-0.05) |
*$5,000 for Challenger Bank customers
After G&C Mutual Bank cut last week, Challenger Bank has followed suit, meaning for now, no term deposit rates in Australia are at 5.20% p.a for one year terms (according to Savings.com.au's market research).
Challenger only cut one year terms 5 basis points though, so it remains at a market leading rate of 5.15% p.a.
Other movers
- Arab Bank Australia cuts rates 10 bps
- Australian Unity cut rates up to 10 bps, including one year terms which are now at 5.00% p.a.
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Want to earn a fixed interest rate on your cash? The table below features term deposits with some of the highest interest rates on the market for a six-month term.
Picture by Timothy Eberly on Unsplash
William Jolly
Aaron Bell
