What Does This Mean for Your Savings and Investments?
With the Reserve Bank of Australia (RBA) widely expected to cut the cash rate at its upcoming meeting, major banks are already adjusting their term deposit rates in anticipation of a lower interest rate environment. Westpac, ANZ, and Macquarie have joined NAB in slashing rates, following Commonwealth Bank’s recent cuts.
This signals a shift in the financial landscape—while borrowing may become more affordable, savers and investors relying on high-term deposit rates may need to rethink their strategies.
Why Are Banks Cutting Term Deposit Rates?
The expectation of a February rate cut has driven banks to adjust their offerings preemptively. As of February 13, market traders are pricing in a 90% chance of a 25-basis-point reduction, bringing the cash rate down from 4.35% to 4.10%.
The Australian Bureau of Statistics (ABS) reported that inflation eased in Q4 2024, reinforcing the likelihood of a monetary policy shift. Despite a still-resilient labor market and strong discretionary spending, banks are making moves that suggest they anticipate the RBA’s policy pivot.
Banking Sector Updates: Who’s Cutting Rates?
Westpac Makes a Modest Move
Westpac trimmed its 11-month term deposit rate by 5 basis points, now offering 4.60% p.a., maintaining one of the strongest rates among major banks.
ANZ Drops Rates Up to 20 Basis Points
ANZ adjusted its Advanced Notice Term Deposits, cutting rates across various terms:
| Term | New Rate | Change | Payment Frequency |
|---|---|---|---|
| 3 Months | 3.00% p.a. | -15 bps | End of term |
| 6 Months | 3.40% p.a. | -10 bps | End of term |
| 8 Months | 4.60% p.a. | -15 bps | End of term |
| 9 Months | 3.60% p.a. | -20 bps | End of term |
| 24 Months | 3.75% p.a. | -5 bps | End of term |
Macquarie Bank Follows Suit
Macquarie trimmed 5 basis points from its term deposit rates, bringing its best rate to 4.60% p.a. for three-month deposits:
| Term | New Rate | Change |
|---|---|---|
| 3 Months | 4.60% p.a. | -5 bps |
| 6 Months | 4.50% p.a. | -5 bps |
| 9 Months | 4.40% p.a. | -5 bps |
| 12 Months | 4.35% p.a. | -5 bps |
AMP Bank Cuts Rates After Recent Hikes
AMP Bank made sweeping adjustments across its term deposit range, cutting up to 15 basis points. However, it surprised the market by hiking its 2-year term deposit rate by 190 basis points to 4.05% p.a. for deposits over $5,000.
Suncorp Bank and Judo Bank Reduce Long-Term Rates
- Suncorp cut 4- and 5-year term deposit rates by up to 35 basis points.
- Judo Bank dropped its 6-month rate to 4.75% p.a., further stepping back from its previous market-leading position.
What Does This Mean for Savers and Investors?
With major banks trimming term deposit rates, it’s becoming clear that the era of 5%+ deposit rates may be coming to an end. While savings accounts may also be affected, borrowers could benefit from lower mortgage rates if the RBA follows through with expected rate cuts.
If you’re currently locked into a term deposit, now is the time to review your options. Should you roll over your funds at lower rates or explore alternative investment opportunities?
Navigating the Changing Rate Environment with Vantage Loans
At Vantage Loans, we help you stay ahead of market shifts. Whether you’re looking to refinance, take advantage of lower mortgage rates, or explore better savings and investment options, our expert team is here to guide you. Contact us today at 1800 595 500, email support@vantagefinancial.com.au, or visit vantagefinancial.com.au to discuss your financial strategy in light of these market changes.
