Term Deposit Rates Drop – Say Goodbye to 5% Returns (Feb 3-7 2025)

Posted on: 14 February 2025

Term deposit rates have seen a significant shake-up this week, with multiple banks slashing their offerings in line with movements in the money markets. If you've been eyeing a 5% return on your term deposits, it might be time to reassess your options.

CommBank Drops Out of the 5% Club

Commonwealth Bank has made the most drastic cuts, reducing some term deposit rates by up to 95 basis points. The bank's previously competitive 4.75% p.a. eight-month special for existing customers has now plummeted to 3.50% p.a. This continues a pattern where CommBank has been gradually reducing rates in anticipation of a cash rate cut, possibly as soon as August 2024.

ING Trims Rates and Slips Down the Leaderboard

ING had been a top contender in the term deposit race, but its latest cuts have seen it lose ground. The bank has trimmed up to 20 basis points across its term deposit range, with its best rate now at 4.85% p.a. for three months. While ING requires a minimum deposit of $10,000, those hoping for higher rates will need to look elsewhere.

Rabobank Reduces Short-Term Rates

Rabobank, known for offering competitive term deposit rates, has followed suit, reducing its three-, six-, nine-, and 12-month rates by up to 15 basis points. Its top rate now sits at 4.75% p.a. for three months, while its six-month rate of 4.55% p.a. lags behind banks still offering 5.00%+.

Where Do the Best Rates Stand?

While many major banks have adjusted their term deposit rates downward, some institutions are still offering competitive returns. Below is a snapshot of where term deposit rates currently stand across key banks:

Top Term Deposit Rates (as of this week)

Institution	3 Months	6 Months	9 Months	1 Year	2 Years	3 Years	5 Years
AMP Bank	5.00%	5.15%	5.05%	4.95%	4.50%	3.00%	3.00%
Police Bank	4.10%	4.00%	5.00%	4.75%	-	-	-
Judo Bank	4.85%	4.95%	4.90%	4.85%	4.65%	4.55%	4.45%
ING Direct	4.90%	4.90%	4.65%	4.70%	4.40%	-	-
Macquarie Bank	4.65%	4.60%	4.55%	4.50%	3.90%	3.80%	3.80%

While 5%+ rates are becoming scarce, AMP Bank and Police Bank are still offering them on select terms, making them worth considering for investors seeking maximum returns.

More rates can be found here

Other Major Rate Movers

Several smaller banks have also made significant cuts this week:

G&C Mutual Bank: Reduced rates by up to 40 basis points for terms between three months and two years.
Summerland Bank: Trimmed up to 30 basis points for terms from nine months to five years.
BankVic: Slashed its 18-month term deposit rate by 50 basis points to 4.00% p.a. for deposits between $5,000 and $5 million.
Bank First: Cut up to 20 basis points across three-month to five-year term deposits, with one-year Regular Income products down 10 basis points.

What’s Next for Term Deposit Rates?

The current trend suggests that banks are preparing for a potential cash rate cut in the second half of 2024. This means term deposit rates could continue to fall, making it crucial for investors to lock in higher rates sooner rather than later.

If you’re looking for safe and competitive returns, now might be the right time to shop around and compare term deposit offers before rates decline further.

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