Several term deposit providers made notable moves in the wake of Tuesday's monetary policy decision, when the RBA announced the cash rate target will remain at 4.35% until at least 18 June.

While the hold was all but assured, the headline came from the accompanying Statement on Monetary Policy (SOMP), where the forecast was that rates would remain at the current level until mid 2025.

That doesn't mean this is the RBA's plan, with many experts like CommBank's head of Australian economics Gareth Aird still expecting rate cuts to begin in November, but it does mean developments this year like the upside surprise in Q1 inflation have had a material impact on the outlook for the economy.

The term deposit market has been mixed over the past few weeks, with top rates hovering around the 5.20% p.a mark, but the movement this week was mostly all upwards, with several new market leading rates.

Commonwealth Bank varies rates up to 35 bps

Term length Deposit size Payment frequency Interest rate (Change)
Three months $50,000-$1,999,999 End of term 3.45% p.a (-0.05)
Six months $50,000-$1,999,999 End of term 3.70% p.a (-0.05)
Nine months $50,000-$1,999,999 End of term 3.95% p.a (-0.05)
One year $50,000-$1,999,999 End of term 4.60% p.a (+0.35)

CommBank cut rates on all terms 11 months or shorter by 0.05%, while terms one year and above got a significant boost.

CBA head of Australian Economics Gareth Aird still expects the RBA to start cutting rates in November, with the cash rate projected at around 3.10% p.a by the end of 2025.

Boosting rates on longer term deposits does not reflect this outlook, but a top rate of 4.60% p.a is still well behind the highest on the market, so perhaps this round of increases is to calibrate its savings and loan books.

Heartland hikes rates up to 20 bps

Term length Deposit size Payment frequency Interest rate (Change)
Six months $25,000-$1,000,000 End of term 5.25% p.a (+0.05)
One year $25,000-$1,000,000 End of term 5.35% p.a (+0.20)

Heartland Bank (previously Challenger) is now the market leader for six month and one year terms.

The 5.25% p.a return on six month terms is level with Bank of Sydney, but 5.35% p.a on one year terms is well ahead of the competition, 15 basis points in front of Great Southern Bank (5.20% p.a).

This is also now just 15 basis points away from the peak of 5.50% p.a reached last year.

For TD fans who have been holding out in 2024 for the biggest possible payday on a one year term, the decision is whether to swoop now or gamble that rates will continue to go up.

For now, the most likely scenario is probably that Heartland pull a Credit Union SA, offering a market leading rate for a few weeks to hoover up a bunch of deposits then cut back, but it's still possible for rates to go even higher if other providers decide to follow this bold move.

Bank of Sydney hikes rates up to 20 bps

Term length Deposit size Payment frequency Interest rate (Change)
Six months $1,000-$1,000,000 End of term 5.25% p.a (+0.10)
Nine months $1,000-$1,000,000 End of term 5.25% p.a (+0.20)

Bank of Sydney is well and truly back amongst it at the top, joining Heartland at the summit of the six month market while moving ahead on nine month terms.

It was Bank of Sydney that briefly hit 5.50% p.a last year, so it's definitely one to watch for punters on the look out for the next market leading rate.

These rates are also available on business term deposits.

G&C Mutual hikes rates up to 35 bps

Term length Deposit size Payment frequency Interest rate (Change)
Three months $1,000-$99,999,999 End of term 4.85% p.a (+0.15)
Six months $1,000-$99,999,999 End of term 5.20% p.a (+0.35)

G&C Mutual Bank is now level with Great Southern Bank for six month terms, offering a 5.20% p.a return.

Last week, this would have been the highest on market, but G&C were eclipsed this week by the increases from Heartland and Bank of Sydney.

However, G&C offers these rates on deposits up to $99,999,999, while the other two cap online applications at $1,000,000 (although can be contacted for larger investments).

Gateway Bank hikes 10 bps

Term length Deposit size Payment frequency Interest rate (Change)
One year $1,000-No maximum limit End of term 5.15% p.a. (+0.10)

Another small but notable movement was Gateway Bank, with a competitive offer north of the 5% threshold.

Other movers

  • Bank First hikes rates 10 bps
  • ME Bank cut rates up to 245 bps

Picture by Ray Hennessey on Unsplash