Term deposit returns continue to race to the floor nearly a month since the Reserve Bank of Australia (RBA) cut the nation's benchmark rate by 25 basis points.
The third largest bank in Australia is the largest bank to adjust rates in a period that has seen widespread TD rate cuts across the board.
One of this week's movers even reversed its previous week's hike, dropping the rates on its term deposit offerings.
As it is with the cash rate cut, expect that term deposit rates, along with home loan rates, are all but headed south.
With the RBA hesitant to introduce further cuts and signaling concerns over upside risks, term depositors may soon see rates stabilising.
However TD rate movements are subject to a range of factors, including yield curve matching with what banks can get in other funding markets, signalling they aren't desperate for punters' funds.
Regardless, everyday depositors may be looking at the glory days of 5% p.a. in the rearview mirror, though the spread on top of inflation is probably the healthiest it's been in a while, with headline inflation at just 2.4%.
NAB slashes term deposit rates
NAB wielded the axe on its term deposit products, reducing returns on popular terms, including its headline offer for the 8-month TD.
This week's move marks the first time NAB adjusted term deposit rates since the RBA February cut.
However, unlike its widespread cuts pre-RBA meeting, NAB has only touched its 6- and 12-month term deposits, shedding as much as 20 basis points.
| Term | New Rate (Change) | Payment Frequency |
|---|---|---|
| 6 Months | 3.40% p.a. (-10 bps) | End of term |
| 8 Months | 4.50% p.a. (-10 bps) | End of term |
| 12 Months | 4.00% p.a. (-20 bps) | Annually |
| 12 Months | 3.95% p.a. (-15 bps) | Monthly |
NAB customers seeking strong returns on a one-year term deposit can earn 4.00% p.a. with the bank's 12-month TD paying interest annually.
This translates to $200 pre-tax earnings for a minimum deposit amount of $5,000.
NAB's headline rate, however, remains available through the 8-month term deposit, currently paying 4.50% p.a.
Depositors can lock away funds up to $1,999,999.
HSBC cuts rates up to 25 bps
This week's next-most significant mover, HSBC, made sweeping reductions across its range of term deposit products, cutting rates by up to 25 basis points.
Short-term deposits bore the brunt of the cuts, while longer-term deposits saw reductions of between 5 and 15 basis points.
HSBC's last adjustment to term deposit rates was in September last year, making this a return to the rate cycle for Australia's 10th largest bank (by household deposits).
Here are the updated HSBC term deposit rates, applicable for returns paid at maturity:
| Term | New Rate (Change) |
|---|---|
| 3 Months | 4.25% p.a. (-25 bps) |
| 6 Months | 4.15% p.a. (-25 bps) |
| 9 Months | 4.15% p.a. (-15 bps) |
| 12 Months | 4.15% p.a. (-5 bps) |
Rabobank brings term deposit rates down
If you managed to lock in Rabobank's boosted rates last week, consider yourself fortunate; this week, the bank reversed course, undoing some of its recent hikes.
Rabobank's one-year fixed term deposit, which received a 5 basis point increase just a week ago, has now been slashed by 15 basis points to 4.30% p.a.
Longer-term deposit rates also took a hit, though the 5 basis point reductions this week were milder compared to the hefty 30 basis point increases from the week prior.
And all of these along the other terms that slid further down just a week after their rates were reduced.
Here's a snapshot of Rabobank's latest term deposit rate changes:
| Term | New Rate (Change) |
|---|---|
| 3 Months | 4.55% p.a. (-10 bps) |
| 6 Months | 4.40% p.a. (-10 bps) |
| 9 Months | 4.40% p.a. (-10 bps) |
| 1 Year | 4.30% p.a. (-15 bps) |
| 3 Years | 4.20% p.a. (-10 bps) |
| 5 Years | 4.65% p.a. (-5 bps) |
Still, the rate on the five-year term is most competitive in the market, with the bank going against the grain and hiking rates on this term after the RBA meeting in February.
Other movers:
- BankVic slashed 12 month Regular Income term deposit rates by 10 basis points
- MyState Bank brought term deposit rates down by up to 10 basis points
- Northern Inland CU cut term deposit rates by as much as 25 basis points
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Looking to lock away your savings and earn interest? Below is a selection of term deposit products with a six-month term.
Provider | |||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| At Maturity | $product[$field["value"]] | $product[$field["value"]] | $product[$field["value"]] | 1000 | $product[$field["value"]] | $product[$field["value"]] | More details | ||||||
| FEATURED | Personal Term Deposits - 6 months
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Disclosure | |||||||||||||
Personal Term Deposits - 6 months
Disclosure
| |||||||||||||
| At Maturity | $product[$field["value"]] | $product[$field["value"]] | $product[$field["value"]] | 5000 | $product[$field["value"]] | $product[$field["value"]] | More details | ||||||
Term Deposit - 6 months | |||||||||||||
| At Maturity | $product[$field["value"]] | $product[$field["value"]] | $product[$field["value"]] | 25000 | $product[$field["value"]] | $product[$field["value"]] | More details | ||||||
Term Deposit - 6 months | |||||||||||||
| At Maturity | $product[$field["value"]] | $product[$field["value"]] | $product[$field["value"]] | 25000 | $product[$field["value"]] | $product[$field["value"]] | More details | ||||||
Term Deposit ($25,000+) - 6 months | |||||||||||||
| At Maturity | $product[$field["value"]] | $product[$field["value"]] | $product[$field["value"]] | 5000 | $product[$field["value"]] | $product[$field["value"]] | More details | ||||||
Macquarie Bank Term Deposit (<$1,000,000) - 6 months | |||||||||||||
- $0 monthly account fee
- Choose your own term with options from one month to five years.
- Guaranteed rate of return
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Harry O'Sullivan
Denise Raward
Bernadette Lunas
Rachel Horan
