October term deposit market finishes strong with new 5% rates

Just when it looked like the party was over, the Australian term deposit market took another twist this week.

There were widespread rate increases, including several new market leading returns from some of the previous heavy hitters.

The Q3 CPI inflation numbers also came out this week, and while price growth continues to mellow even Commonwealth Bank economists, the last hold outs, now say the RBA won't/shouldn't cut rates until next year.

Evidently inflation is not slowing enough to warrant an RBA rate cut, which puts confidence back into the TD rate setting committees far and wide.

Earliest predictions now are for cuts to begin in February, which gives us at least another four months of rates at this level.

It's still probably unlikely we'll see a return to the highs of earlier in the year, when top TD rates hit 5.40% p.a., or even last year when Bank of Sydney briefly touched the sky at 5.50% p.a. - conventional wisdom would suggest some of these rates will probably get trimmed in the coming weeks.

For now though, we can enjoy this week's round of term deposit rate increases.

Heartland Bank hikes 5 bps

Heartland Bank is doing its best to live up to its goal to offer banking products that are "the best or only of their kind".

After this week's round of increases, it now offers the highest available rate on the Australian market (per Savings.com.au's market research) for both nine months and one year terms.

The minimum deposit of $25,000 might be a barrier for entry for some, although if you're already a customer you can open one of these TDs with just $5,000.

Bank of Sydney hikes up to 150 bps

*Both of these products are only available to online customers

Bank of Sydney is well and truly back among the heavy hitters in the TD market.

After a 150 basis point increase, its three month rate of 5.00% p.a. is now level with Judo Bank at the summit of the market.

For six months, Bank of Sydney is still 0.05% p.a. back from the market leaders, of which Judo Bank is also among.

It's a welcome return to form though from one of the previous major players, and given Bank of Sydney were happy to take rates to new heights last year, these latest hikes might excite the TD afficionados.

Macquarie hiked rates 5 bps

Macquarie Bank has been making moves over the past few weeks to lure in savers.

It boosted the welcome rate on its savings account by 15 basis points to 5.50% p.a. a couple of weeks back, which applies on balances up to $250,000.

While it remains below the 5% threshold for term deposits, there was progress this week with six and nine month returns now at 4.85% p.a..

The top TD rate at Macquarie continues to be 4.90% p.a. for three months, 0.10% away from the market leaders Judo and the aforementioned Bank of Sydney.

Gateway Bank cuts 5 bps

The market giveth, and it taketh away.

Gateway Bank trimmed back its three month and six month rates this week by 0.05% p.a. each.

However, attentive readers will note that the outgoing rates are exactly the same as the incoming returns from Bank of Sydney, so it isn't exactly the end of the world.

Other movers

• Arab Bank Australia cut rates by up to 15 basis points
• Qudos Bank varied rates up to 20 bps, including a 0.10% increase to six month rates to a new maximum of 4.95% p.a..
• Heritage Bank cut rates up to 25 bps

Advertisement

Looking for a hot term deposit rate? Below are some of the top products available on the Australian market

Picture by Towfiqu Barbhuiya on Unsplash