ANZ joins interest rate cuts sparking warning for Aussies: ‘Now is the time’

Term deposit rates are tumbling right now, with ANZ the latest bank to slash interest rates for customers. Aussie savers are the big losers from the move and are being urged to act now before things drop even further.

ANZ has cut interest rates across its range of term deposits by between 0.05 and 0.90 per cent. The change brings ANZ’s highest term deposit rate in line with fellow major banks CBA, Westpac and NAB, with a 4.75 per cent rate offered for eight-month terms.

Mozo personal finance expert Rachel Wastell told Yahoo Finance the pace of term deposit rate cuts had “accelerated” ahead of the Reserve Bank of Australia (RBA) lowering the cash rate.

“When it comes to term deposits, we’re seeing a marked shift in the landscape as expectations of an RBA rate cut loom closer,” she said.

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The comparison site tracked more than 200 individual cuts in September and has already seen 86 cuts from 16 providers in the first nine days of October.

“ANZ and NAB are among those making adjustments - NAB has now cut rates twice since August, while ANZ reduced its term deposit rates just yesterday,” Wastell said.

“A closer look reveals that the brunt of these cuts is concentrated on shorter-term offerings, particularly the headline six-, 12-, and 24-month rates.”

Term deposit rates aren’t the only thing dropping, with fixed home loan rates also starting to tumble.

NAB cut its fixed rates by up to 0.65 per cent yesterday, while Macquarie Bank notably cut rates by up to 0.40 per cent last week.

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Term deposit market 'cooling off'

There are still attractive rates on offer for customers who shop around, with a 5.10 per cent rate on offer for 6-month terms with Gateway Bank and Judo Bank.

Meanwhile, a 5.05 per cent rate is on offer for 12-month terms from Family First Bank and a 4.70 per cent for two-year terms from Qudos Bank.

But the leading rates are lower than they were a few months ago, with Mozo finding the top 6-month term rate had dropped 0.20 per cent, 12-month terms by 0.25 per cent and two-year terms by 0.30 per cent in the space of just two months.

“For savers, this trend signals the importance of acting sooner rather than later. The market is cooling off, and leading term deposit rates may not hold at their current levels for much longer,” Wastell told Yahoo Finance.

“If you’re thinking about locking in a term deposit to secure a guaranteed rate, now might be the time to make that decision.”

Banks forecast to cut savings rates

Savings interest rates have been largely stable across the major banks over the last month, aside from minor tweaks from Westpac and ANZ, but this could change once the cash rate drops.

Morgan Stanley expects Australia’s major lenders will slash rates on savings accounts to protect margins once the RBA cuts rates.

The investment bank expects the RBA will cut 0.75 per cent off the cash rate in 2025, bringing it down to 3.6 per cent.

In a note to clients, analysts revealed they expect bonus savings account rates will be cut by an average of 40 basis points more than the cash rate, while standard accounts could take a 20 basis point hit on top of cash rate cuts.

“Specifically, we believe Westpac’s higher ‘base’ rate of 1.85 per cent on Westpac Life (its bonus savings account), and CBA’s higher ‘base’ rate of 2.35 per cent on NetBank Saver (its standard savings account) will provide them with flexibility to reduce rates more than peers without risking outsized customer attrition,” they said.

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