TD rates have generally been in freefall since well before the February monetary policy decision, but there has still been a flurry of banks reacting to the RBA cut with further cuts of their own.
There are now merely a handful of products on the Australian market with rates that start with a 5, and given some of these providers are yet to respond to the cash rate cut it might not be long before that count shrinks to zero.
Unless the economic outlook drastically changes, it looks like what was something of a golden era for term deposit rates has all but passed into history.
Macquarie was the biggest name to cut this week, while some previously competitive rates from ING and Qudos Bank were also axed.
However, the one bit of good news for Aussie savers came from RaboBank, which gave a big boost to its TD products with terms of one year and above.
Macquarie cuts rates 5 bps
| Term length | Deposit size | Payment frequency | Interest rate (Change) |
|---|---|---|---|
| Three months | $5,000-$1m | End of term | 4.55% p.a. (-0.05) |
| Four months | $5,000-$1m | End of term | 4.50% p.a. (-0.05) |
| One year | $5,000-$1m | End of term | 4.45% p.a. (-0.05) |
For the second week in a row Macquarie Bank cut TD rates, down by another 0.05% in its usual policy of incremental change.
That three month rate of 4.55% p.a. is now the highest available at Macquarie, bringing it below the top available rate at all of the big four banks.
ING cuts rates by up to 25 bps
| Term length | Deposit size | Payment frequency | Interest rate (Change) |
|---|---|---|---|
| Three months | $10,000-$5m | End of term | 4.65% p.a. (-0.20) |
| Six months | $10,000-$5m | End of term | 4.65% p.a. (-0.10) |
| Nine months | $10,000-$5m | End of term | 4.35% p.a. (-0.25) |
| One year | $10,000-$5m | End of term | 4.50% p.a. (-0.05) |
| Two years | $10,000-$5m | End of term | 4.00% p.a. (-0.20) |
ING term deposit rates were slashed this week, but there was slightly better news for savers elsewhere from the Dutch-owned bank.
The Savings Maximiser account - which has consistently had one of the highest savings account rates on market in recent times - had the top rate cut by only 0.10% instead of the full 25 bps RBA cut.
Customers can still earn 5.40% p.a. on their savings providing they meet bonus conditions, which is perhaps a positive sign that competition in the deposit space could help keep rates from plummeting as monetary policy eases.
Qudos Bank cuts rates by up to 40 bps
| Term length | Deposit size | Payment frequency | Interest rate (Change) |
|---|---|---|---|
| Three months | $2,000-$100m | End of term/Monthly | 4.25% p.a. (-0.25) |
| Six months | $5,000-$100m | End of term/Monthly | 4.70% p.a. (-0.25) |
| Nine months | $5,000-$100m | End of term/Monthly | 4.50% p.a. (-0.35) |
| One year | $5,000-$100m | End of term/Monthly | 4.50% p.a. (-0.30) |
| Two years | $5,000-$100m | End of term/Annually/Monthly | 4.30% p.a. (-0.40) |
By the time the rate disappeared on Thursday, cuts elsewhere had led to the 4.95% p.a. that was available for six month terms at Qudos Bank becoming one of the strongest on market.
The 0.25% cut means it was a brief high, although as rates continue to trend downwards 4.70% p.a. might still look pretty appealing in the coming weeks.
Qudos Bank also has the following special offer rates. All of the following are for deposits of $10,000 or more, with interest paid at maturity:
| Term length | Interest rate (Change) |
|---|---|
| Five months | 4.55% p.a. (-0.15) |
| Seven months | $5,000-$100m (-0.15) |
| Eleven months | $5,000-$100m (-0.30) |
MyState Bank cut rates up to 20 bps
| Term length | Deposit size | Payment frequency | Interest rate (Change) |
|---|---|---|---|
| Five months | $5,000-$100m | End of term | 4.60% p.a. (-0.20) |
| Six months | $5,000-$100m | End of term | 4.85% p.a. (-0.15) |
| Eight months | $5,000-$100m | End of term | 4.40% p.a. (-0.20) |
| Nine months | $5,000-$100m | End of term | 4.60% p.a. (-0.15) |
| One year | $5,000-$100m | End of term | 4.60% p.a. (-0.05) |
MyState was another TD provider to cut previously market leading rates, taking its six month rate below 5.00% p.a.
Given cuts elsewhere though, the new 4.85% p.a. rate remains fairly strong compared to what's on offer elsewhere.
RaboBank varies rates by up to 30 bps
| Term length | Deposit size | Payment frequency | Interest rate (Change) |
|---|---|---|---|
| Three months | $1,000-$2m | End of term | 4.65% p.a. (-0.10) |
| Six months | $1,000-$2m | End of term | 4.50% p.a. (-0.05) |
| One year | $1,000-$2m | End of term | 4.45% p.a. (+0.05) |
| Three years | $1,000-$2m | Annually | 4.30% p.a. (+0.30) |
| Four years | $1,000-$2m | Annually | 4.60% p.a. (+0.30) |
| Five years | $1,000-$2m | Annually | 4.70% p.a. (+0.30) |
Finally, the good news, which was supplied by the predominantly agribusiness lending outfit RaboBank.
Three and six month terms did get cut, but RaboBank have given longer term TDs a hefty boost.
The four and five year rates are particularly eye catching - you'd be extremely hard pressed to find a stronger or even equivalent rate for these term lengths elsewhere.
If you're on the hunt for a long term fixed investment, here's how much you could earn over five years at Rabo for various deposit sizes, minus any tax:
| Deposit size | Annual interest payment | Total earnings over five years |
|---|---|---|
| $10,000 | $470 | $2,350 |
| $100,000 | $4,700 | $23,500 |
| $1,000,000 | $47,000 | $235,000 |
Other movers
- Summerland Bank cut rates 10 bps
- Heritage Bank and People's Choice varied rates by up to 105 bps, including a new top rate of 4.65% p.a. for four month terms
- BankWest varied rates 175 bps, including a big increase to five month rates to reach 4.75% p.a.
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Picture from Miles Burke on Unsplash
Denise Raward
Bernadette Lunas
Harry O'Sullivan
Harrison Astbury
