Term deposit rate rise good for retirees

Peter Terlato 4 August 2016

savings retire

Savers are being rewarded despite record low cash rate.

Earlier this week the Reserve Bank of Australia (RBA) cut the official cash rate to a record low 1.50%. While a second rate cut in 2016 was anticipated, what the banks did next was not.

Rather than passing on the full rate cut to customers, Australia's banks gave retirees and savers something to cheer about by raising term deposit interest rates.

The Commonwealth Bank of Australia (CBA) announced it will raise its one-year term deposit rate 0.55% to 3%, lift two-year deposits to 3.1% and increase three-year term deposits to 3.2%.

NAB decided to lift eight-month term deposits by 0.85% to 2.9%.

ANZ will boost rates for its one-year advanced notice term deposits by 0.6% to 3% and two-year deposits by 0.75% to 3.2%.

Westpac customers will see one-year term deposit rates increase 0.55% to 3%, two-year deposits rise 0.45% to 3.1% and three-year deposits grow 0.55% to 3.2%.

Outside of the big four, St. George, BankSA and Bank of Melbourne are all upping their one-year term deposit accounts by 0.55% to 3%. Bankwest is also raising its 12-month term deposits to 3%.

The rate changes will largely be implemented by next week. Here's the full list:

Financial InstitutionProductPrevious rateNew rateChangeDate effective
Commbank12 month Term Deposit $50,000-$1,999,9992.45%3.00%0.55%19 Aug
Commbank24 month Term Deposit2.60%3.10%0.50%19 Aug
Commbank36 month Term Deposit2.70%3.20%0.50%19 Aug
NAB8 month Term Deposit2.05%2.90%0.85%8 Aug
ANZ12 month Advance Notice Term Deposit2.40%3.00%0.60%5 Aug
ANZ24 month Advance Notice Term Deposit2.45%3.20%0.75%5 Aug
Westpac12 month Term Deposit2.45%3.00%0.55%8 Aug
St.George12 month Term Deposit2.45%3.00%0.55%8 Aug
BankSA12 month Term Deposit2.45%3.00%0.55%8 Aug
Bank of Melbourne12 month Term Deposit2.45%3.00%0.55%8 Aug
Bankwest36 month Term Deposit2.90%3.00%0.10%9 Aug
Bankwest12 month Term Deposit2.85%3.00%0.15%9 Aug
Bank of Queensland12 month Term Deposit2.75%3.05%0.30%9 Aug
Bank of Queensland24 month Term Deposit2.60%3.15%0.55%9 Aug
Bank of Queensland36 month Term Deposit2.65%3.25%0.60%8 Aug
Bank of Sydney3 month Term Deposit ($1000-$9,999)1.85%1.60%-0.25%4 Aug
Bank of Sydney3 month Term Deposit ($50,000-$99,999)2.35%2.10%-0.25%4 Aug
Bank of Sydney12 month Term Deposit ($1000-$9,999)2.05%1.80%-0.25%4 Aug
Bank of Sydney12 month Term Deposit ($50,000-$99,999)2.65%2.40%-0.25%4 Aug
Newcastle Permanent Building Society12 month Term Deposit2.00%2.50%0.50%8 Aug
IMB48 month (4 Year) Term Deposit ($5,000 -$24,999.99)2.90%2.80%-0.10%5 Aug
IMB60 month (5 Year) Term Deposit ($5,000 -$24,999.99)3.10%3.00%-0.10%5 Aug
Westpac12 month Term Deposit2.45%3.00%0.55%8 Aug
Westpac24 month Term Deposit2.65%3.10%0.45%8 Aug
Westpac36 month Term Deposit2.65%3.20%0.55%8 Aug

Mortgage holders lost out, as lenders cut rates on home loans and business loans by less than 0.25%. CBA trimmed rates by 13 basis points, while Westpac cut by 14 basis points, ANZ by 12 basis points and NAB by 10.

The move drew ire from both sides of politics. Prime Minister Malcolm Turnbull called on the banks to pass on the full cut, while opposition leader Bill Shorten renewed calls for a royal commission into banking.

The decision to hike up term deposit rates follows the Australian Prudential Regulatory Authority's (APRA) ruling in April, requiring 15 of Australia's largest banks to maintain a stable funding profile by 2018.

A report by Macquarie Securities revealed Westpac, ANZ and NAB will need to raise an additional $9 billion, $14 billion and $19 billion of term debt, respectively, by 2018. CBA currently meets the ratio requirement.

If you want to take advantage of increased interest term deposits or get a head start on your retirement, compare pensioner savings accounts to find one that suits your needs.

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2 Responses to Term deposit rate rise good for retirees

  1. Default Gravatar
    Donald | September 24, 2016

    When would see term deposit rates go back up to 8 percent

    • Staff
      Clarizza | September 26, 2016

      Hi Donald,

      Thanks for your question.

      Unfortunately, there is no way to say for certain when term deposit rates will go back up to 8%. You can however check our RBA cash rate announcement page to see what experts predict in this space. Please note, the experts’ predictions are based on trends but the final outcome rest solely on the RBA.


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