Term deposit rates slashed
(19 August 2011 – Australia) Since the start of last week, 29 Australian banks slashed term deposit rates according to rate comparison site Mozo.com.au, bringing the average two-year deposit rate down 40 basis points to 5.69 percent.
Three-year deposits have dropped an average of 47 basis points to 5.77 percent on average in the same period.
Commonwealth Bank dropped the rate on a two-year deposit of A$50,000 by 70 basis points to 5.3 percent over the past week, while National Australia Bank lowered its rate by 35 basis points to 5.5 percent.
Lower term deposit rates go hand in hand with lower fixed rate home loans, analysts say. Banks, including ANZ, Commbank and Westpac cut fixed rate home loans last week after the sovereign debt crisis overseas cast a cloud of interest rate expectation in Australia.
'There has been a very widespread and quickly implemented drop on longer-term deposit rates, suggesting the banks are factoring in a rate drop from the Reserve Bank in September,' said Mozo's managing director Rohan Gamble. 'It's been so widespread and so aggressive across the board, that it does show a sense of real skittishness from the banks.'
Investors and some analysts are tipping that official Reserve Bank interest rates - on which most savings and deposit rates are set - will fall in response to a slowing local economy and the worries created by the sovereign debt crisis in Europe.
Australian Prudential Regulation Authority (APRA) data showed that banks at the end of June held just under A$500 billion of cash deposits from households, up A$34 billion, or 7 percent from a year ago.
Commonwealth Bank dropped the rate on a two-year deposit of A$50,000 by 70 basis points to 5.3 percent over the past week, while National Australia Bank lowered its rate by 35 basis points to 5.5 percent.
Lower term deposit rates go hand in hand with lower fixed rate home loans, analysts say. Banks, including ANZ, Commbank and Westpac cut fixed rate home loans last week after the sovereign debt crisis overseas cast a cloud of interest rate expectation in Australia.
'There has been a very widespread and quickly implemented drop on longer-term deposit rates, suggesting the banks are factoring in a rate drop from the Reserve Bank in September,' said Mozo's managing director Rohan Gamble. 'It's been so widespread and so aggressive across the board, that it does show a sense of real skittishness from the banks.'
Investors and some analysts are tipping that official Reserve Bank interest rates - on which most savings and deposit rates are set - will fall in response to a slowing local economy and the worries created by the sovereign debt crisis in Europe.
Australian Prudential Regulation Authority (APRA) data showed that banks at the end of June held just under A$500 billion of cash deposits from households, up A$34 billion, or 7 percent from a year ago.
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