Investors chasing high interest rates on bank term deposits have been urged to shop around, as Australia’s big four slashed term deposit rates last week. ANZ led the charge, clipping 0.8 per cent a year off some term deposits, followed by National Australia Bank, Commonwealth Bank and Westpac.
The fall comes in spite of the Reserve Bank of Australia holding the official cash rate at 4.35 per cent at its last meeting in early August. Experts expect further falls in deposit rates if the RBA cuts rates in the future.
RateCity research director Sally Tindall said: “While the RBA has poured cold water over the possibility of a rate cut in 2024, it’s also worth remembering the Reserve Bank board is continuing to refuse to rule anything in or out.” Fierce competition for new business has seen some lenders trimming mortgage rates, which could affect profitability unless they lower the amount paid on deposits. In simple terms, banks buy money from us as depositors, and sell that same money to our kids as a mortgage.
Lowering deposit rates is one way of keeping the profits up for shareholders. For investors chasing a better rate, the choice is vast. Ms Tindall said not to fall into the trap of simply ignoring a maturing term deposit.
Nick Bruining Nick Bruining “Diarise the day your term deposit is set to mature and start canvassing your options well in advance of this date,” she said. Ideally, that would be a about a week in advance, and investors should not think twice ab.