As of 17 August, market expectations are there is a 12% chance the cash rate will be lowered in September, according to the ASX-powered RBA rate tracker.

While rates are still likely to stay at 4.10%, most people now expect that for the time being, the RBA is done with rate hikes, and many institutions that offer term deposit products have been lowering rates in response.

Banks want to avoid having too many customers locked in to returns well above market value should interest rates start to go down to maintain a healthy margin between the rates customers are paying on loans and what banks are paying out on deposit products.

Take Bank of Sydney for example, which after this week's rate cut has now dropped rates on its previously market leading six month term deposit products by 150 basis points.

Bank of Sydney cuts rates by up to 100 basis points

Term length Deposit size Payment frequency Interest rate (percentage point change)
Three months $1,000-$1,000,000 End of term 4.00% p.a (-0.85)
Six months $1,000-$1,000,000 End of term 4.00% p.a (-1.00)

It's a sad sight for savers to see Bank of Sydney's rates cut once again, as just a few weeks ago, returns on this six month term deposit hit 5.50% p.a.

It could be a change in strategy, a response to economic conditions or some combination of the two, but whatever the reason, savers who didn't jump on the higher returns are now probably kicking themselves.

Great Southern Bank cuts rates by up to 20 basis points

Term length Deposit size Payment frequency Interest rate (percentage point change)
Six months $5,000-$99,999,999.99 End of term 4.95% p.a (-0.15)
Nine months $5,000-$99,999,999.99 End of term 5.00% p.a (-0.15)
One year $5,000-$99,999,999.99 End of term 5.05% p.a (-0.20)

Great Southern Bank (formerly CUA) cut back this week on rates that have been unchanged for the past month.

These products are also available with monthly interest payments, but this also means a 10 basis point discount on the interest rate.

Australian Unity cuts rates by 25 basis points

Term length Deposit size Payment frequency Interest rate (percentage point change)
One year $5,000-$99,999,999.99 Annual 5.00% p.a (-0.25)
One year $5,000-$99,999,999.99 Semi annual 4.99% p.a (-0.25)
One year $5,000-$99,999,999.99 Quarterly 4.99% p.a (-0.25)
One year $5,000-$99,999,999.99 Monthly 4.99% p.a (-0.25)

AMP cuts rates by up to 15 basis points

Term length Deposit size Payment frequency Interest rate (percentage point change)
Three months $25,000-$4,999,999.99 End of term 4.75% p.a (-0.10)
Six months $25,000-$4,999,999.99 End of term 5.00% p.a (-0.15)
Nine months $25,000-$4,999,999.99 End of term 4.95% p.a (-0.15)
One year $25,000-$4,999,999.99 End of term 5.05% p.a (-0.15)

As it has done for the past few weeks, AMP once again cut back term deposit returns.

The highest available rate at AMP is now just 5.05% p.a, compared to 5.45% p.a just a month ago and 5 basis points behind Judo's 5.10% p.a rate available for one year terms.

AMP still offers perhaps the widest range of term deposit products, with the option for semi annual, quarterly or monthly payments, varying term lengths and discounted rates for deposits under $25,000.

ME cuts rates by up to 15 basis points

Term length Deposit size Payment frequency Interest rate (percentage point change)
Nine months $5,000-$2,000,000 End of term 5.00% p.a (-0.10)
Nine months $5,000-$2,000,000 Monthly 4.95% p.a (-0.10)
One year $5,000-$2,000,000 End of term 5.05% p.a (-0.15)
One year $5,000-$2,000,000 Monthly 5.00% p.a (-0.15)

In June, ME became the first bank to crack the 5% p.a mark for term deposits, before raising to 5.20% for one year products a few weeks after.

After this rate cut, it's now nearly back where it began two months ago, offering a maximum rate of 5.05% p.a on one year terms.

Other movers

  • Bank First decreased rates by up to 15 basis points
  • RACQ increased rates by up to 50 basis points
  • BankVIC increased rates by up to 25 basis points
  • Beyond Bank increased rates by up to 10 basis points

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