HOT MONEY. HEAD HERE
So far term deposit rates are not going haywire, and they haven’t been. But the Treasury and the liquidity management disciplines of the industry may be sorely tested with the deadline to repay the final tranche of the RBA’s pandemic-era Term Funding Facility looming at the end of the month.
Pre-payments by banks ahead of the deadline have been flowing through, with the outstanding value of funding obtained under the Term Funding Facility standing at $64.55 billion at the end of last week, Friday’s weekly data on Monetary Policy Operations from the RBA shows.
$30 billion has been repaid over the last 10 weeks.
TFF funding peaked at $188 billion in late 2021.
Banks’ surplus Exchange Settlement balances with the Reserve Bank have been falling steadily over the last three weeks and now stand at $267.8 billion.
12-month term deposit rates are consolidating around the 5.00 per cent mark, data compiled by Savings.com.au shows.
Heartland Bank Australia – the newest name in the industry – has the market leading rate of 5.35 per cent. There are 10 banks in the Savings database with 12-month rates in a range from 5.05 per cent to 5.20 per cent.
The rates advertised on high yield at-call accounts are also clustered around 5.00 per cent.
In this segment ME, a subsidiary brand of Bank of Queensland, is market leader with a rate of 5.55 per cent, including the bonus rate.
Matt Wilson, the sell-side banking analyst at Jeffries, on Friday argued “the action is the switch from at-call transactions to term deposits as savers seek to rationally bank much higher yields.”
Source: Jeffries