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Unfortunately for Australian savers, term deposit rates are currently at record lows. So when will term deposit rates go up? No one can say for sure, but term deposit rates usually move in line with the official RBA cash rate.
To get an idea of when term deposit rates might increase, it’s important to understand the many factors that influence term deposit interest rates, which we'll outline in this guide. You can also compare some current term deposit rates below.
fixed for 6 months
Earn a 0.10% p.a. loyalty bonus when you roll over your term.
The Judo Bank Term Deposit term lengths range from three months to five years. Minimum opening deposit is $1,000. No account-keeping or set-up fees to pay.
Term deposit rates in Australia are currently at record lows. The main reason for this is because the official cash rate is also at a record low. As of July 2019, the cash rate is just 1.00%. This is down from 1.50% in August 2016, which at the time was also a record low.
Analysis by finder.com.au released back in April 2017 revealed that term deposits were delivering an average rate of return of just 2.45% to Australian savers. That was the lowest average return on record since 2002, when the Reserve Bank of Australia (RBA) first started collecting this type of data. And now, they're even lower than this!
The cash rate is Australia’s benchmark interest rate, so any changes the RBA makes to this figure are commonly passed on to the products offered by Australian banks. So while the current low rates are great news for home loan borrowers, they mean that savers are forced to accept minimal returns on their term deposit investments. This is because, when banks reduce the amount of interest customers need to pay on their home loan, they need to make up for this elsewhere so savings accounts are cut back.
However, it’s worth pointing out that a cut to the cash rate doesn’t necessarily mean lower term deposit rates. As an example, when the RBA cut the cash rate from 1.75% to 1.50% in August 2016, the Commonwealth Bank of Australia (CommBank), the National Australia Bank (NAB), Australia and New Zealand Banking Group (ANZ) and Westpac Banking Corporation responded by raising rates on some key term deposits. There were several possible reasons behind this move, including:
There are several factors that have an influence on how banks set their term deposit rates, including:
These factors combine to affect how banks set different interest rates based on:
There’s no surefire way of predicting what will happen to term deposit interest rates in the months ahead. However, there are a couple of simple things you can do to get a better idea of when rates may increase:
Regardless of the RBA’s official cash rate and average term deposit rates, there are still several things you can do to increase the interest-earning capacity of a term deposit:
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Apart from the interest rate, there are a few other important issues to consider when comparing term deposit accounts. These include:
You can also find out more about comparing term deposits in this handy guide.
The next step is to check out our finder page on comparing term deposits. Use the table above to compare the interest rates available for your chosen term and investment amount.
Once you’ve found a few accounts you like, click the relevant “Go to site” links to find out more about the features and conditions of each product. Compare the benefits and drawbacks of each term deposit before deciding which one is the right fit for your investment needs.
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