Major Australian Banks Cut Term Deposit Rates Amid Unchanged RBA Rate
Despite the Reserve Bank of Australia (RBA) maintaining the cash rate at 3.85% last week, major banks including NAB and ANZ have reduced their term deposit interest rates. This move aligns with the actions of 17 other banking institutions who have followed suit, signalling a broader trend in the bank lending market.
NAB announced reductions in term deposit rates, adjusting them downward by 5 to 20 basis points, with significant cuts to its 7-month term deposit, which now sits at 3.80%. Meanwhile, ANZ made a similar move, lowering its 8-month Advance notice term deposit rate by 10 basis points, also bringing it to 3.80%.
Rachel Wastell, a personal finance expert from Mozo, commented on these developments, stating, "When 17 banks, both big and small, slash term deposits within a week it’s not a coincidence—it’s a signal.” She highlighted that even though the RBA decided to hold rates steady, the banks are adjusting their products in anticipation of potential future rate reductions, indicating a possible easing cycle.
Market Trends and Fixed Home Loan Rate Reductions
In addition to term deposits, fixed home loan rates are witnessing a decline. Following the RBA’s recent announcement, several lenders including QBANK, SWS Bank, Coastline Bank, and The Capricornian have trimmed their fixed rates by between 20 to 30 basis points. Wastell noted the significance of these adjustments, urging both borrowers and savers to heed the signals from banks: “If banks thought rates were staying put, we wouldn’t be seeing term deposits and fixed-rate home loans falling.”
Future Rate Cut Predictions
Looking ahead, major banks hold varied views on prospective RBA interest rate cuts. Current forecasts include:
- CBA: Two cuts anticipated in August and November, reducing the cash rate to 3.35%.
- Westpac: Predicts four cuts across several months, with a target rate of 2.85% by May.
- NAB: Expects three cuts, leading to a cash rate of 3.10% by early next year.
- ANZ: Also forecasts two cuts for a future rate of 3.35%.
Canstar analysis indicates that if two further cuts are realised, those with a $600,000 mortgage could see their minimum repayments drop by nearly $180. Should four cuts occur, the drop could escalate to approximately $350.
Implications for Savers and Borrowers
While these potential rate cuts may provide financial relief for mortgage holders, they raise caution for savers. Wastell observed that the current window for securing optimal deposit rates is closing, stating, “Those peak term deposit rates are already behind us… even these lower rates won’t be around for much longer.” She recommends that anyone considering locking in a deposit act promptly, reinforcing that banks are preemptively reducing rates in anticipation of RBA decisions.
In summary, as banks adjust interest rates on term deposits and home loans, it becomes increasingly clear that the financial landscape may be shifting towards lower rates—an indication that both borrowers and savers should consider their options carefully in anticipation of upcoming changes in the market.
