NAB, Macquarie cut term deposit rates as banks anticipate RBA rate cut: ‘Continue to fall’

NAB has joined Commonwealth Bank (CBA) and Westpac in cutting its term deposit interest rates yet again. There has been a flurry of term deposit rate cuts from banks as they prepare for the Reserve Bank of Australia (RBA) to cut rates, sparking a warning for savers.

NAB has cut its eight-month term deposit rate to 4.75 per cent, after increasing it to 4.8 per cent in August. It joins CBA who dropped its nine-month special rate to 4.75 per cent last week and Westpac which cut its 11-month term deposit rate to 4.65 per cent, plus a 0.10 per cent online bonus.

Macquarie Bank, Australia’s fifth biggest bank, also cut its term deposit rates this week. It dropped its six-month, nine-month and one-year rates by 0.10 per cent. Its six-month term deposit rate is now 4.8 per cent, while its top headline rate is 4.95 per cent for three months.

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Mozo personal finance expert Rachel Wastell told Yahoo Finance the deluge of terms deposit cuts showed the banks were getting ready for a lower interest rate environment.

“In the middle of the year, term deposits were a safe haven for savers looking to lock in a solid return, but the landscape is shifting,” Wastell said.

“Term deposit cuts often signal where the banks think rates are heading, and the number of cuts coming through the Mozo database suggest banks anticipate a rate cut within the next six to 12 months.”

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Wastell urged savers looking for a term deposit to secure leading rates now, with rates likely to fall in the months ahead as banks anticipate rate cuts.

“For savers, it’s a clear indication to keep an eye on these offers because the more certain banks become that a rate cut is approaching, the further these rates may fall,” she said.

Canstar data insights director Sally Tindall has also told savers to prepare for more rate cuts, with the comparison site recording 12 banks cutting 47 term deposit rates last week and just three increasing four rates.

“Savers looking to lock up their nest egg in a term deposit should keep in mind that these rates are likely to continue to fall in the months ahead,” Tindall said.

The top six-month term deposit rate is currently 5.10 per cent, while the top 1-year rate is 5.00 per cent.

It comes after ANZ and Westpac made tweaks to their savings accounts, pushing rates lower for some customers.

Fixed rates also falling

The flurry of term deposit cuts has come at the same time as banks drop their fixed mortgage interest rates.

Macquarie Bank dropped its two-year fixed rate by 0.20 per cent, lowering it from 5.59 per cent to 5.39 per cent for owner-occupiers with a 30 per cent mortgage deposit.

This makes it the lowest two-year fixed rate on the market, with Westpac offering a two-year fixed rate of 5.99 per cent, CBA 6.29 per cent, NAB 6.49 per cent and ANZ 6.54 per cent.

Despite this, the gap between the lowest fixed and variable rates remains slim, with just a 0.36 per cent difference with the new Macquarie rate.

How low do the Big Four banks think interest rates will drop?

Here are the Big Four banks current forecasts:

• CBA: First cut in December 2024, with 5 cuts to bring cash rate to 3.10 per cent

• Westpac: First cut in February 2025, with 4 cuts to bring cash rate to 3.35 per cent

• NAB: First cut in February 2025, with 5 cuts to bring cash rate to 3.10 per cent

• ANZ: First cut in February 2024, with 3 cuts to bring cash rate to 3.60 per cent

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