While further rate hikes in 2024 are still a possibility, competition in the term deposit space has seemingly died down over the final weeks of the year.

CommBank, Judo Bank and Macquarie all reduced returns once again after also cutting rates last week.

These decreases aren't indiscriminate however: InfoChoice's database has found a growing schism between TDs with term lengths under one year, where rates increased on average through December, and those with term lengths between 2-5 years that had rates decreased.

This perhaps points to a change in the outlook for interest rates: while cuts to the cash rate target look unlikely in early 2024, banks are seemingly confident rates will be heading down significantly by the start of 2025 and onwards.

CommBank cuts special offer rates by 10 bps

Term length Deposit size Payment frequency Interest rate (Percentage Point change)
One year $5,000-$1,999,999 End of term 4.90% p.a (-0.10)
Two years $5,000-$1,999,999 Annually 4.70% p.a (-0.10)

Once again, CommBank dialled back its special offer term deposit rates.

These products are only available to existing customers, and at least a month of notice is required for an early withdrawal.

CommBank economist Stephen Halmarick is predicting 75 basis points' worth of cuts to the cash rate target in the second half of 2024, which at this rate would bring it to 3.60%.

"CBA is forecasting the annual rate of inflation back at 3% at the end of 2024, well ahead of the RBA’s current forecast and closer to the Commonwealth Government’s latest forecast," Mr Halmarick said.

"We also expect the RBA to begin a modest monetary policy easing cycle from September 2024 onwards."

NAB cuts rates by up to 50bps

Term length Deposit size Payment frequency Interest rate (Percentage Point change)
One year $5,000-$1,999,999 Annually 4.90% p.a (-0.10)
13-23 months $5,000-$1,999,999 Annually 4.50% p.a (-0.50)

Continuing with the theme, Australia's third largest bank also cut back rates on its one and two year products.

Both one year and 13-23 months paid 5.00% p.a last week, but this week's update means the one year rate is now 40 bps above the longer term.

NAB economist Tapas Strickland continues to predict a 25bps increase to the cash rate in February.

Judo cuts rates by 5 bps

Term length Deposit size Payment frequency Interest rate (Percentage Point change)
One year $1,000-$999,999 End of term 5.20% p.a (-0.05)
One year $1,000-$999,999 Monthly 5.10% p.a (-0.05)

Last week, Judo boosted returns on three and six month term deposits, but cut rates two years and above.

This time around, the neobank has once again cut back on its one year term, which was at a market leading 5.35% p.a just a few weeks ago.

Firstmac cuts rates by 10 bps

Term length Deposit size Payment frequency Interest rate (Percentage Point change)
One year $5,000-$5,000,000 End of term 5.15% p.a 

Likewise, Firstmac also cut back rates on one year terms that were previously within spitting distance of the market leaders.

ING and Bank of Sydney continue to be out on their own with a 5.30% p.a return on one year term deposits.

Macquarie Bank cuts rates by up to 25bps

Term length Deposit size Payment frequency Interest rate (Percentage Point change)
Six months $5,000-$1,000,000 End of term 4.80% p.a (-0.05)
Nine months $5,000-$1,000,000 End of term 4.75% p.a (-0.10)
One year $5,000-$1,000,000 End of term 4.75% p.a (-0.20)
Two years $5,000-$1,000,000 Annually 4.50% p.a (-0.20)
Three/Four years $5,000-$1,000,000 Annually 4.40% p.a (-0.20)

AMP cuts rates by up to 60bps

Term length Deposit size Payment frequency Interest rate (Percentage Point change)
One year $5,000-$24,999 End of term 5.05% p.a (-0.15)
One year $25,000-$10,000,000 End of term 5.10% p.a (-0.15)
Two years $5,000-$24,999 Annually 4.60% p.a (-0.60)
Two years $25,000-$10,000,000 Annually 4.65% p.a (-0.60)

AMP Bank was another former market leader to cut back rates this week, most significantly on two year terms where rates were reduced by 60 bps.

The above selection is a very small sample of the different products available at AMP, with varying deposit sizes and payment frequencies, as well as one of the widest arrays of term lengths available in Australia.

Other movers

  • Horizon Bank cuts rates 10 bps
  • Hume Bank increases rates up to 50 bps
  • BankWest varies rates up to 75 bps
  • Beyond Bank and Bank Australia both upped rates by 10 bps

Picture by Gene Gallin on Unsplash