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Is now the time to look for a term deposit?

Alex Ritchie avatar
Alex Ritchie
- 4 min read
Is now the time to look for a term deposit?

The cash rate may have officially peaked according to big four bank economists, with rate cuts predicted for 2024. Savers may be wondering if now is the time to lock in a high term deposit rate while the higher-rate environment is still around.

Let’s explore if now is the time to consider locking in a term deposit rate and, if so, what are some of the most competitive rates available?

Has the cash rate peaked?

One key way to determine whether or not now is the time to look for a term deposit is to take stock of the cash rate.

The national cash rate is a benchmark rate that the Reserve Bank of Australia (RBA) meets to set. It has a significant influence on interest rates on a range of products, from home loans to savings accounts and term deposits. Put simply, if the cash rate is increased, so too should interest rates on these products.

For over 12 months, the RBA has been increasing the cash rate, lifting it by four percentage points. This has meant that interest rates on term deposits have reached highs not seen in years. 

If you’re trying to pick the peak of the market to lock in a higher rate on your term deposit, now may be the time to consider doing so. 

This is because three of the four big bank’s economists have stated that the cash rate has officially peaked at 4.10%. Meaning, interest rates may not get much higher than they are now for some time. 

Big four bank’s cash rate forecasts

  • CBA: Peak of 4.10% in June 2023, then dropping to 3.10% by end of 2024
  • Westpac: Peak of 4.10% in June 2023, then dropping to 2.60% by end of 2025
  • NAB: Peak of 4.35% by November 2023, then dropping to 3.10% by early 2025
  • ANZ: Peak of 4.10% in June 2023, then dropping to 3.85% by December 2024

As you can see, economists from Commonwealth Bank, Westpac and ANZ have forecast that the cash rate hike in June would be the last in this cycle of tightening. If anything, from this point forward the cash rate may start falling again at the end of 2024. Only NAB has suggested that one more cash rate increase could occur by the end of the year.

Of course, these are just predictions which are subject to change at any time. The cash rate had been increased so frequently since April 2022 as a result of sharply rising inflation levels. Now, the latest CPI figures have shown that annual inflation has been decreasing. After the last few years, it’s safe to say that no one can predict what may happen in the future that could change this downward trend for inflation. 

But if the downward trend continues, it may be likely that the RBA holds off on changing the cash rate for some time, potentially moving to cut it in the next two years. Interest rates on term deposits may be as high as they could be for some time.

High rate term deposit accounts

If you’re considering taking out a term deposit, you may be wondering what some of the higher-rate options available are? These are some of the highest rate term deposit accounts available on the RateCity database as of the time of writing:

Highest 6-month term deposit rates

Highest 12-month term deposit rates

Highest 3-year term deposit rates

Compare term deposits

Product database updated 22 Jun, 2024

This article was reviewed by Personal Finance Editor Peter Terlato before it was published as part of RateCity's Fact Check process.