Although it's unlikely the Reserve Bank of Australia will lower the cash rate at its board meeting next week, there's a new wave of anticipation with the US Federal Reserve making the first cut to its benchmark rate on Thursday.

It was a 50-basis point drop to take the rate to 4.75%-5.0% with markets widely expecting ongoing 25-basis point cuts at every meeting from now on until the rate is 3.0-3.25%.

According to the old adage, when the US economy sneezes, the rest of the world catches a cold.

Term deposit rates have been plummeting for the past couple of months as Australian banks and deposit takers position themselves according to market forecasts.

For savers looking to lock in good term deposit rates, the pickings are getting slimmer but there are still some rates of 5% or more for shorter terms, six or 12 months.

This week on the TD market, there were more interest rate falls across the board with one smaller bank slicing a chunky 70 basis points off its 12-month rates. Let's start there.

BCU Bank takes the axe to TD rates

The customer-owned bank announced sweeping term deposit rate drops first thing Monday morning, taking 70 basis points off its 12-month rates for amounts between $1,000 and under $1 million.

The new rate is 3.8% p.a. for interest paid end of term and the rate drops from there for payments occurring during term.

But BCU Bank's five-month rate has undergone a five-basis point rise to 4.9% p.a., the best rate among the changes.

Here's a run-through of the new Standard Term Deposit rates, paid end of term:

Term length Deposit size Payment frequency Interest rate (Change %)
3 months $1,000-under $1m End of term 4.3% p.a. (-0.3)
4 months $1,000-under $1m End of term 4.0% p.a.(-0.5)
5 months $1,000-under $1m End of term 4.9% p.a. (+0.05)
6 months $1,000-under $1m End of term 4.4% p.a. (-0.3)
9 months $1,000-under $1m End of term 4.0% p.a. (-0.4)
12 months $1,000-under $1m End of term 3.8% p.a. (-0.7)
24 months $1,000-under $1m End of term 3.8% p.a. (-0.2)
36 months $1,000-under $1m End of term 3.7% p.a. (-0.3)

BCU has also dropped the rates on a range of its Regular Income and 55-Plus Investments term deposits for amounts between $5,000 and under $1 million, with more frequent payments.

The 12-month rate for the 55-Plus product has also been slashed by 70 basis points to 3.8% p.a. while the six-month rate is now 4.4% p.a., down 30 basis points - both paid monthly.

Heritage drops TD rates up to 30 basis points

The Queensland-based bank also tweaked some of its term deposit rates lower this week.

The biggest drop of 30 basis points was on its 12-month term deposit rate to 4.45% p.a. for amounts between $1,000 and under $100 million with interest paid monthly.

Here are some of the new rates:

Term length Deposit size Payment frequency Interest rate (Change %)
6 months $1,000-under $100m Semi-annually 4.85% (-0.05)
Quarterly 4.8% p.a. (-0.1)
Monthly 4.8% p.a. (-0.1)
9 months $1,000-under $100m End of term 4.6% p.a. (-0.1)
Semi-annually 4.55% p.a. (-0.15)
Quarterly 4.5% p.a. (-0.2)
Monthly 4.5% p.a. (-0.2)
1 year $1,000-under $100m Semi-annually 4.5% p.a. (-0.25)
Quarterly 4.45% p.a. (-0.3)
Monthly 4.45% p.a. (-0.3)

Heritage also shaved 20 basis points of some of its Farm Management term deposit products.

The 12-month rate on amounts between $1,000 and $800,000 is now 3.75% p.a. for interest paid both quarterly and at end of term.

Other rate movers

Other banks and deposit takers lowering term deposit rates this week include:

  • People's Choice has taken up to 20 basis points off its 9-10 and 12-month rates for amounts between $5,000 and under $1 million. Its best new rate is 4.6% p.a. invested for 9-10 months, with interest paid end of term.
  • Horizon Bank has sliced 10 basis points off its rates for deposits between $1,000 and under $100 million invested for nine months as well as one-to-three-year terms. It's now paying 4.7% p.a. for nine months with interest paid end of term.
  • Community First Bank also took 10 basis points off its two-and-three-year deposit rates. Its best new rate is 4.7% for amounts between $100,000 and $1 million invested for either two or three years, paying annually.
  • Hume Bank has taken up to 20 basis points off a range of its one-, two-, and three-year term deposit rates. Its best new rate is 4.75% p.a. for amounts between $1,000-$250,000 invested for nine months with interest paid end of term.
  • Summerland Bank has decreased its fixed term deposits by up to 25 basis points

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