The term deposit market became more competitive in August as market leader Judo Bank increased its rates by relatively small amounts, allowing other deposit takers to catch up.
In July Judo increased its 12-month rate by 50 basis points to 3.45 per cent but in August it increased the rate by only 15 bps.
According to the latest Mozo Banking Roundup, Judo, AMP Bank, Macquarie Bank and G&C Mutual Bank are all offering 3.60 per cent for 12 months.
Judo does not have a top rate for any terms under 12 months. The best rate for under 12 months is AMP’s offer of 3.6 per cent for 11 months.
Judo increased its two-year rate by 15 bps to 4 per cent, its three-year rate by 15 bps to 4.15 per cent, its four-year rate by 15 bps to 4.3 per cent and its five-year rate by 15 bps to 4.4 per cent.
It is still the rate leader for all terms from two to five years but AMP is offering the same rates.
Term deposits are the core of Judo’s funding and the bank’s chief executive Joseph Healy has said the bank is prepared to pay “a little more” to maintain a strong flow of longer-dated deposit funding to give it a good asset-liability match.
In the current market, a little more is becoming a little less.
Other deposit takers have become more selective in the way they are changing TD rates. Macquarie increased its three and four-month rates by 50 bps, its six and nine-month rates by 25 bps, its 12-month rate by 30 bps, its two-year rate by 15 bps and its three-year rate by 10 bps.
Goldfields Money has become an aggressive competitor for short-term deposits, with top rates of 2.05 per cent for two months, 2.4 per cent for three months, 2.5 per cent for four months, 2.9 per cent for six months and 3.15 per cent for nine months.
A couple of the big banks have selectively targeted terms around 12 months. ANZ is offering 3 per cent for 11 months and Westpac is offering 3 per cent for 12 months.
Commonwealth Bank and NAB have uncompetitive rates. CBA’s best TD rate is 1.7 per cent for three years and NAB’s is 2.5 per cent for 12 months.
Canstar reported that overall, 41 deposit takers increased TD rates by an average of 41 bps and three cut rates by an average of 34 bps.