Australian banks cut term deposit rates amidst cheaper funding

About 130 interest rate cuts were recorded in individual term deposit products in March.

Australian top banks including National Australia Bank (NAB), Commonwealth Bank of Australia (CBA), Australia and New Zealand Banking Group (NAB) and Westpac (WBC) have cut at least one of their interest rates on deposits with terms of less than a year, reports the Sydney Morning Herald.

CBA, NAB, and Westpac have cut one and two-year term deposits since early March by between 0.1 and 0.3 ppt.

Peter Marshall, data and compliance manager at comparison website Mozo told Sydney Morning Herald that about 130 cuts to individual term deposit products have been recorded in March, the highest since August of 2017.

Meanwhile, managing director of fixed interest broker Curve Securities, Andrew Murray, said that whole term deposit rates have slipped over recent months signalling the decline in the benchmark bank bill swap rate, as well as the softer demand for loan funding due to the weak housing market.

"If these funding pressures continue to stay low, and wholesale rates continue to drop, then the banks really should unwind the rate hikes that they put in place towards the end of last year, based on the fact that their funding pressures had gone up," Murray told Sydney Morning Herald.