Rising Term Deposit Rates Show No Signs of Slowing Down
Several financial institutions have recently increased their term deposit rates, with Australia’s two largest banks among the key players. In addition, Heartland Bank has introduced the highest one-year term deposit rate in the database.
The surge in term deposit rates shows no signs of easing, as several major banks are set to announce new rates this week. These include Commbank, Westpac, and ING, among others. Market analysts continue to anticipate another increase in the Reserve Bank of Australia (RBA) interest rate in May. Concerns about productivity and the economy’s ability to grow without causing inflation may suggest that interest rates could rise higher than previously expected.
This week marked a significant milestone as term deposit rates surpassed 5% for the first time. Additionally, a new benchmark was established in the one-year market.
Judo Bank Leads the Way with 5% Returns
Judo Bank has officially become the first institution to exceed the 5% threshold in this round of rate hikes. It now offers a 5% annual percentage return on its five-year term deposits. The bank is also providing the highest rates in the database for two-, three-, and four-year terms. This shift suggests that Judo Bank may be adjusting its expectations regarding future cash rates.
Heartland Bank Hits 4.88% for One-Year Deposits
Heartland Bank has raised its rates for three-month, six-month, nine-month, and one-year term deposits by 25 basis points. The new rates stand at 4.40% p.a., 4.55% p.a., 4.75% p.a., and 4.88% p.a., respectively.
Heartland Bank has long been a strong competitor to Judo Bank in the term deposit market. This week, it matched Judo’s performance with some of the top rates available. For now, Heartland appears to be focusing on shorter-term deposits (one year or less), which contrasts with Judo Bank’s approach, where all of Heartland’s rates for terms longer than one year remain below 4%.
However, for short-term deposits, Heartland’s 4.88% p.a. offer is the highest in the database, surpassing Judo Bank and Credit Union SA by 12 basis points.
Lunar New Year Special Offers from CBA and Westpac Group
Australia’s two largest banks have introduced special term deposit offers to celebrate the Lunar New Year. While Westpac’s top return of 4.38% p.a. is relatively modest, its subsidiaries—St George, BankSA, and Bank of Melbourne—have launched more attractive deals. These subsidiaries offer a top return of 4.68% p.a. for eight-month term deposits.
This rate is above the highest six-month returns in the database but still falls short of Heartland Bank’s top nine-month return of 4.75% p.a. Meanwhile, Commbank is offering the same rate for 18-month term deposits, but only for existing retail or SMSF customers and up to a balance of $5,000,000.
ING Raises Rates to 4.6% for Six-Month Deposits
ING has increased its term deposit rates this week, with particular highlights for six- and nine-month deposits, which now offer 4.60% p.a. The one-year rate has also been raised to 4.70% p.a.
ING now leads the biggest banks in Australia in terms of customer deposit book, with its top rate slightly outperforming Commbank’s limited-time offer. For six-month term deposits, ING is tied with Credit Union SA for the highest return in the database, still slightly ahead of Heartland Bank.
Commonwealth Bank Adjusts Rates
While the special offer has drawn attention, CommBank has also made minor adjustments to its standard term deposit rates. For two-year terms with deposits under $50,000, the rate has been reduced to 4.35% p.a., while deposits over $50,000 still earn 4.40% p.a. Additionally, 18- to 23-month terms have seen a slight increase to the same rate.
Other Banks Also Raise Rates
Several other financial institutions have also adjusted their term deposit rates:
- Macquarie Bank: Raised rates by up to 10 bps, including a new top rate of 4.50% p.a. for six- or nine-month deposits.
- Bank Australia and Qudos Bank: Increased one-year rates by 10 bps, reaching a top return of 4.60% p.a.
- BankVic: Hiked rates by 10 bps, taking its top return to 4.50% p.a. for twelve-month deposits renewed online.
- QBank: Raised rates by up to 30 bps.
