The average rate on at-call deposits, which account for the bulk of deposits, has increased by around half the increase in the cash rate over the past six months, the Reserve Bank has calculated.
However, the average rate on new term deposits has increased by more than the cash rate. The RBA said the increase in TD rates was in line with movements in bank bill swap rates and longer term swap rates, which are the benchmarks for TDs.
It also reflects that fact that TD rates are more attractive to ADIs because of the favourable treatment under liquidity coverage rules than at-call deposits.
As a result, growth in deposits is now being underpinned by higher term deposit inflows, the RBA reported in the latest Statement on Monetary Policy.
Since the start of the year, the proportion of major banks’ deposits paying low interest rates (between zero and 25 basis points) has fallen from around 40 per cent to around 15 per cent – similar to pre-pandemic levels.
According to the October Mozo Banking Roundup, TD rates climbed as high as 4.95 per cent last month.
The top rate under 12 months was AMP Bank’s offer of 3.9 per cent. AMP, Judo Bank and Macquarie Bank all offered 4.1 per cent for 12 months.
For term over 12 months, the top rates last month were 4.55 per cent for two years, 4.7 per cent for three years, 4.85 per cent for four years and 4.95 per cent for five years. AMP and Judo offered these rates.
Despite the lag in the increase in at-call rates, competition for at-call deposits stepped up a gear in October, with a number of ADIs increasing rates on some products by more than 25 basis points.
According to Mozo, ANZ, Commonwealth Bank, ING, Macquarie Bank, NAB and Westpac all made outsize increases.
But the increases are not being evenly distributed. The market is becoming increasingly fragmented, with some increases only available for introductory rates on new business and others for specific customer segments, such as young people, and specific distribution channels, such as digital-only.
ANZ increased its Save account rate by 25 bps to 3.25 per cent. Save is part of the bank’s ANZ Plus digital-only offering. The bank increased its other introductory and ongoing bonus rate products rates by 35 bps.
Bank of Queensland increased its Future Saver account rate by 10 bps to 4.1 per cent – the highest ongoing bonus rate in the Mozo database. To be eligible to use Future Saver, customers must be under 35 years old.
Commonwealth Bank added 70 bps to the five-month introductory rate of NetBank Saver, taking it to 3 per cent. It added 30 bps to the ongoing bonus rate of GoalSaver, taking it to 2.4 per cent.
ING increased the ongoing bonus rate on Savings Maximiser by 45 bps to 4.05 per cent.
Macquarie increased the four-month introductory rate on its Savings Account by 30 bps to 4 per cent (reverting to an ongoing rate of 3.2 per cent). This is the highest introductory rate in the market. Rabobank