AMP, Bank of Sydney and Challenger Bank were among the providers that altered term deposit rates this week.

Not much has changed since last week in terms of the long term outlook for the RBA cash rate: the ABS released the monthly CPI inflation indicator for January earlier in the week, but Michele Bullock and the board will likely wait for the more substantial quarterly data to draw any substantial conclusion.

The likeliest outcome continues to look like a prolonged period with rates steady at 4.35%, before cuts begin towards the end of the year.

While this still isn't guaranteed (every time Michele Bullock speaks she makes it clear these outcomes are dependant on the incoming data), there is a bit less uncertainty than there has been in previous months.

This makes it unlikely Australia will see a return to the highs of mid last year where term deposit rates cracked 5.5% p.a, but there will still likely be some rate increases as providers make moves to grab market share in a more stable enviroment.

This week for example saw AMP, Bank of Sydney, Qudos and Challenger Bank all increase some term deposit rates, with Challenger drawing level with the market leading one year rate.

AMP vary rates up to 50 bps

Term length Deposit size Payment frequency Interest rate (Percentage point change)
Six months $25,000-$10,000,000 End of term 4.80% p.a (-0.20)
Nine months $25,000-$10,000,000 End of term 4.75% p.a (-0.20)
13 months $25,000-$10,000,000 End of term 4.70% p.a (+0.50)

AMP Bank is the latest to draw back from the 5% p.a threshold, with a 4.80% p.a return available on six and seven month products now the highest available.

Six months have larger returns than longer terms, likely a reflection of the general expectation rates will start to go down by the end of 2024.

At AMP, these products are available at a slightly discounted rate for smaller deposit sizes, as well as more regular interest payments.

Westpac cut standard rates up to 93 bps

Term length Deposit size Payment frequency Interest rate (Percentage point change)
Eight/Nine months $5,000-$2,000,000 End of term 3.85% p.a (-0.93)
Eleven/Twelve months $5,000-$2,000,000 End of term 4.00% p.a (-0.70)

The largest bank to move term deposit rates this week was Westpac, with large cuts to eight and eleven month terms.

The highest rate available among Westpac's standard term deposit range is now 4.25% p.a, on terms between 12 and 23 months.

However, Australia's second largest bank continues to offer 'special' rates on term deposits opened or renewed by existing customers at a significant premium.

Westpac cut special offer rates 20 bps

Term length Deposit size Payment frequency Interest rate (Percentage point change)
Eleven months $5,000-$5,000,000 End of term 4.70% p.a (-0.20)

The highest term deposit rate available at Westpac is the special offer, which only applies for existing customers.

Customers can earn an additional 0.10% p.a for opening or renewing their account online, which takes the maximum rate to 4.80% p.a.

This is higher than the equivalent offer at CommBank (4.75% p.a), although the CBA product is for one year terms.

NAB offer an unconditional 4.70% p.a rate on one year terms.

Bank of Sydney boost rates up to 15 bps

Term length Deposit size Payment frequency Interest rate (Percentage point change)
Six months $1,000-$1,000,000 End of term 5.10% p.a (+0.15)
Nine months $1,000-$1,000,000 End of term 5.10% p.a (+0.10)

Bank of Sydney gave term deposit fans a bit of good news this week, boosting rates on both six and nine month terms to return well above 5%.

For both, Bank of Sydney is now ten points behind the market leaders, Gateway Bank for six months and G&C Mutual for nine.

Qudos Bank vary rates up to 20 bps

Term length Deposit size Payment frequency Interest rate (Percentage point change)
Three months $2,000-$99,999,999 End of term 4.50% p.a (+0.10)
Six months $5,000-$99,999,999 End of term 4.85% p.a (+0.15)
Nine months $5,000-$99,999,999 End of term 4.90% p.a (+0.15)
One year $5,000-$99,999,999 End of term 5.00% p.a (-0.20)

Most term deposit rates at Qudos received a boost this week, with six and nine month terms getting nearer to a rate starting with a 5.

The headline though was a 20 basis point cut to its one year term, which was previously level with the market leaders at 5.20% p.a.

For one year terms, G&C Mutual Bank is now out on its own as the highest available rate in the nation, per savings.com.au's market research.

Challenger Bank vary rates up to 15 bps

Term length Deposit size Payment frequency Interest rate (Percentage point change)
Six months $5,000-$1,000,000 End of term 5.05% p.a (-0.15)
One year $5,000-$1,000,000 End of term 5.20% p.a (+0.05)

Challenger Bank changed up its strategy this week, simultaneously relinquishing its market leader status for six months and claiming it for one year.

It's a noticeable contrast to the likes of AMP and Bank of Sydney, where shorter terms (six months for example) have higher returns than one year, likely because of cash rate expectations.

Challenger Bank might see these developments as an opportunity to claim a substantial portion of the market share for one year terms, as others ease off.

Other movers

  • Hume Bank, Heritage Bank, People's Choice and Beyond Bank all cut rates up to 10 bps
  • Australian Mutual Bank cut rates up to 50 bps

First published on March 2024

Picture by Towfiqu Barbhuiya on Unsplash