The highest TD rate on offer at ANZ is now 4.75% p.a (on eight month terms), down from 4.80% p.a.
This change brings ANZ in line with the rest of the big four - NAB also offer 4.75% p.a for eight months, while it's currently the special offer rate at both Westpac and CommBank for existing customers.
Rates on both term deposits and home loans have been tumbling in recent times, with markets increasingly sceptical about RBA boss Michele Bullock's insistence there is a long way to go before cash rate cuts.
Two, three and five year Australian Government bond yields fell pretty dramatically around the start of August, after softer than expected CPI numbers for the June quarter.
As Judo Bank Chief Economic Advisor Warren Hogan told the Savings Tip Jar podcast though, this doesn't necessarily mean these banks are predicting early rate cuts.
"The bank [isn't] taking any view on interest rate, but the market is, the wholesale market, the big global market...they're the ones who think an RBA rate cut is imminent," he explained.
"The bank itself, it's just going into that market and taking advantage of the price and hedging out the interest rate risk."
With respect to term deposits, when the cost of funding for the likes of ANZ, particularly in the medium term, is lower, banks can afford to drop rates on deposit products.
However, the start of October has seen these medium term bond yields start to rally - three year yields were back up at 3.9% as of 7 October, compared to 3.4% in mid September.
For now though, rates are still on the way down, with NAB declaring last week it now expects rate cuts in February '25 rather than May.
ANZ term deposit rate cuts
| Term length | Deposit size | Payment frequency | Interest rates |
|---|---|---|---|
| Three months | $5,000-$1,999,999 | End of term | 3.15% p.a (-0.05) |
| Eight months | $5,000-$1,999,999 | End of term | 4.75% p.a (-0.05) |
| One year | $5,000-$1,999,999 | End of term | 4.20% p.a (-0.30) |
| Two years | $5,000-$1,999,999 | End of term | 3.80% p.a (-0.20) |
| Three years | $5,000-$1,999,999 | End of term | 3.10% p.a (-0.90) |
As with most of the TD market, ANZ offers its strongest rates for shorter terms - the expectation is that a rate cutting cycle is very likely well before a one year term matures.
While its top rate (4.75% p.a) is in line with the rest of the big four, it's still significantly below what remains on offer in the rest of the market.
For example, both Judo Bank and Gateway Bank still have a top rate of 5.10% p.a on six month terms.
Even only considering the ten largest banks in Australia by customer deposits, there are stronger rates available - ING has a top rate of 4.95% p.a for both six month and one year terms.
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Picture from ANZ
Denise Raward
Harry O'Sullivan
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