Continuing strong deposit flows allowed banks and other ADIs to cut savings rates further in February, with short-term term deposit rates on offer from one bank dropping below the cash rate.
Comparison site Mozo reported in its latest Banking Roundup that rates were cut on 37 at-call accounts last month, while 34 providers cut their TD rates.
The top ongoing bonus rate is 1.35 per cent on ING’s Savings Maximiser, the top introductory rate is 1.75 per cent, which Rabobank is offering for four months, and the top base rate is 1 per cent on the Volt Savings Account.
MyState and 86 400 have ongoing bonus rates of 1.2 per cent.
Mozo said that over the past 12 months the average 12-month TD rate has fallen from 1.43 per cent to 0.56 per cent. The top 12-month rate has fallen from 2 per cent to 1.05 per cent over that time.
The top rate under 12 months, is Judo Bank’s offer of 0.91 per cent over 9 months, the top rate for 12 months is BankVic’s offer of 1.05 per cent and the top rate for two years is Judo Bank’s offer of 1.2 per cent.
Commonwealth Bank’s latest TD pricing includes offers of five basis points for one and two-month terms and eight bps for three months.
Macquarie Securities reported that it is the first time since the 2008 financial crisis that a bank’s TD rates have dropped below the cash rate.
“Like overseas peers, Australian banks can reduce the deposit rates without suffering outflows,” Macquarie said.
“We continue to see upside risk to bank margins in FY21. However, as banks mostly capture their deposit pricing upside this year, looking beyond FY21 the margin outlook starts to look more challenging.”