Waning deposit flows prompt TD rate increases

John Kavanagh

As growth in deposit flows starts to wane, some deposit takers have made significant increases to TD rates over the past month.

AMP Bank, Judo Bank, Newcastle Permanent, Rabobank and Westpac all increased TD rates in July – one of them by more than 50 basis points.

According to APRA’s latest monthly ADI data, household deposit balances grew by 0.6 per cent in the June quarter – an annualised rate of 2.4 per cent.

This is a significant slowdown, compared with growth in inflows late year and early this year. Deposit balances grew by 9.3 per cent over the 12 months to June.

Mortgage lending balances grew by 2 per cent in the June quarter – an annualised rate of 8 per cent and well ahead of deposit growth.

Higher TD rates may indicate the some ADIs are looking to maintain their ratios of deposits to total funding.

According to the latest Mozo Banking Roundup, Westpac increased its five-month rate by 10 bps to 30 bps. It cut its one-year rate by 10 bps to 25 bps.

AMP Bank increased rates on terms from five months to five years. It increased the 12-month rate by 40 bps to 75 bps and the two-year rate by 35 bps to 75 bps.

Rabobank increased rates across the full range of terms. It increased the one-year rate b 25 bps to 75 bps and the four-year rate by 45 bps to 1.05 per cent.

Newcastle Permanent increased its three-year rate by 35 bps to 80 bps, its four-year rate by 45 bps to 90 bps and its five-year rate by 55 bps to 1 per cent.

Judo Bank increased its three and nine-month rates. Judo Bank is the rate leader for nine months and one year through to five years. It’s nine-month rate is 95 bps and one-year rate 99 bps. Its top rate is 1.6 per cent for five years.