Term deposits follow market rates down

Term deposit rates at many financial institutions have been cut in recent weeks as money market rates have fallen across the curve.

The 90 day BBSW on Friday was 7.29 per cent, which is a 28 point decline in two weeks and a 46 point decline over the last month - with the rate now only marginally above the 7.25 per cent official cash rate.

Banks and financial institutions have been slow in passing on the change in funding costs to borrowers, but have been quick to reduce deposit rates, which in many instances were over inflated offering in excess of 1.5 percentage points above cash.

ANZ and Westpac have decreased three month term deposit rates for $25,000 by 25 points in the last three weeks, National are down ten points with Macquarie cutting 40 points and Suncorp 30 points.

Over the same time frame, international banks have also reviewed returns with RaboBank and RaboPlus down 45 points, HSBC 26 points, the BankWest online term deposit down 20 points and ING Direct 15 points.

In the non-bank sector, Austral has dropped 60 points, Newcastle Permanent 25 points, Greater and Heritage 20 points and Police Department 15 points.

For 12-month term deposits, all major banks have cut rates for a $25,000 term with Australia and New Zealand down 2.35 percentage points, Westpac 50 points, Commonwealth 40 points and National ten points.

St George slashed 132 points, Macquarie 60 points with Bendigo & Adelaide 30 points.

Online offerings at ING Direct have dropped 115 points, RaboPlus 95 points, Suncorp 90 points and BankWest 20 points.

At-call deposits have remained virtually unchanged for a $10,000 deposit in the last three weeks, with more products increasing rates than decreasing.

Note: Deposit rates sourced from www.infochoice.com.au.