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A three month term deposit with Bank of Sydney now returns 5% p.a, level with Judo as the highest on market.
For six month terms, the new rate of 5.10% p.a is also just 5 basis points away from Judo.
Both these products are online only - in branch customers can only earn 3.50% p.a for three months and 3.90% p.a for six months.
These latest rate increases come just days after four and nine month rates were boosted.
Savers will welcome Bank of Sydney's return to prominence in the TD market - it remains the only provider to have cracked 5.50% during the rate hike cycle.
A turnaround for TD rates?
After a near uniform downward slide for term deposit rates over the opening months of spring, the past couple of weeks have brought some notable rate increases, including the aforementioned rates at Judo Bank.
This has coincided with bond yields picking back up after dropping in late August.
Markets took softer than forecast Q2 CPI inflation numbers as an indicator that the RBA could cut the cash rate sooner than expected, which lead to the decline in medium term bond rates.
However the most recent and stubborn Q3 inflation figures have put to bed any calls for an early rate cut, which should aid in boosting term deposit rate confidence further.
RBA governor Michele Bullock however has been resolute that rate cuts in 2024 are unlikely, and bond yields are now starting to reflect this again.
This might make more strong term deposit rates, at least on shorter terms, more of a possibility.
However as Huw Bough, Chief Retail Banking Officer at Bank of Sydney, told the Savings Tip Jar podcast, TD rate changes aren't always purely driven by interest rate expectations.
"There's probably three things behind [TD rate changes]...customer behaviour and demand...organisational strategy and position, and the third would be market conditions and competition," he said.
Bank of Sydney term deposit rate changes
| Term length | Deposit size | Payment frequency | Interest Rate (Change) |
|---|---|---|---|
| Three months* | $1,000-$1,000,000 | End of term | 5.00% p.a (+1.50) |
| Six months* | $1,000-$1,000,000 | End of term | 5.10% p.a (+0.05) |
*Both of these products are only available to online customers
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On the hunt for a high rate term deposit? These are some of the strongest returns available on the Australian market at the moment
Picture by Andre Taissin on Unsplash
Denise Raward
Harry O'Sullivan
Aaron Bell
Staff Writers
