ANZ, Heartland lead latest term deposit rate cuts

After Judo Bank's cuts hit the top end of the TD market last week, the slaughter continued unabated.

Rates were already trending down before even the February RBA cut, but in light of the reassessment of the economic outlook in the past couple of weeks Australia's banks have scrambled, nosediving term deposit returns even further.

The highest term deposit rate available on our database is now 4.85% p.a., and with markets pricing in a cut that could be as much as 50 bps at the May monetary policy meeting, even that could be at risk.

Even the most optimistic term deposit enthusiast will by now have concluded the golden era with the highest TD rates since 2012 has come to an end.

However, that doesn't mean TDs should be off your investment radar completely - the forthcoming declines could also coincide with lower returns on risk assets like shares, as well as bonds (although the bond market in the US is seeing prices increase and yields go down to the alarm of many analysts).

For now, here are the latest banks to cut returns:

ANZ cuts rates by up to 25 bps

After the rest of the big four cut their top term deposit rate last week, it will surprise roughly no one that ANZ has followed suit with a 0.25% cut to its flagship eight month rate.

The top return at a big four bank term deposit is now 4.30% p.a. on 11 months at Westpac, available exclusively to existing customers who open their account online.

Despite the market dominance of the big four, rates have consistently been lower than at smaller competitors like Judo Bank or Heartland, but what will depress the TD faithful about this is that the gap between the majors and the top rates on market is actually shrinking, despite these cuts.

Heartland Bank cuts 5 bps

Heartland Bank is the latest casualty at the summit of the market, this week dropping its top rate down to 4.80% p.a.

For now, there are still hold outs at 4.85% p.a. for six months, Gateway Bank being one example, but for anyone looking to invest in a TD soon, it might be sensible to get a move on - that rate might not be here in a week's time.

Suncorp cuts rates by up to 45 bps

Suncorp made sweeping cuts across its term deposit products, which range from one month to five years with various sized investments.

Most products offer higher returns for higher deposits - on four month terms for example customers depositing more than $1 million will earn an extra 10 basis points compared to someone putting in $5,000, which feels a bit unfair.

With a true egalitarian spirit though, Suncorp continues to make its top rate (now 4.55% p.a. after a 0.15% cut) available to all customers who open a six month term deposit.

That rate may have come down, but among the top 10 banks in Australia by customer deposit book size, Suncorp has the strongest TD rate, beating out ING and Bank of Queensland.

MOVE Bank cuts rates by up to 15 bps

MOVE Bank was another heavy hitter to slash rates this week, a round of cuts with the added gravity of eliminating the only rate in our database at 4.90% p.a.

Its flagship six month return is now 4.80% p.a., level with Heartland Bank.

Macquarie Bank cut rates up to 20 bps

Other movers

• Gateway Bank cut its one year rate 5 bps to 4.50% p.a.
• Teachers Mutual Group cut rates by up to 50 bps
• Bank Australia cut rates 30 bps
• Bank of Us cut rates up to 15 bps

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Picture from ANZ