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Disappointment - Term Deposits and Falling interest rates
Last week I had a look at the term deposit rates out there and decided to go with bankwest's tddirect which was offering 8.5%. Their interest rate schedule was dated 12th of August. Knowing previously that their rate was 8.7% i thought i should jump in before the september rate cuts and get in a term deposit. I sent the letter on monday (with my confirmation signature etc) and it got setup today. I checked the interest rate schedule again and they changed it! Now dated 20th of Aug at 8.1%!!!
I knew full well they could do this but i didn't expect it since only the week before the interest rates were different! This rate only lasted 8 days. Now i'm locked in for a year at 8.1% (better than other rates out there but still disappointing). So that was my disappointment this week.
On the other note, it is interesting to see that the interest rates on term deposits are falling so fast. What implications will this have on our economy? Is everyone running scared that we will fall into recession? I saw on the foxtel business channel, one economist's speculation that they expect interest rates to be maybe 6% mid next year which is still considered high. Even possibility of it going to 5% (neutral). What are your takes on this? What are the implications and do u think the economist is right?
I knew full well they could do this but i didn't expect it since only the week before the interest rates were different! This rate only lasted 8 days. Now i'm locked in for a year at 8.1% (better than other rates out there but still disappointing). So that was my disappointment this week.
On the other note, it is interesting to see that the interest rates on term deposits are falling so fast. What implications will this have on our economy? Is everyone running scared that we will fall into recession? I saw on the foxtel business channel, one economist's speculation that they expect interest rates to be maybe 6% mid next year which is still considered high. Even possibility of it going to 5% (neutral). What are your takes on this? What are the implications and do u think the economist is right?
Tags: deposit, interest, rates, recession, term
Views: 7
Replies to This Discussion
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Permalink Reply by Vonny on -
that's true. Bankwest has always been quick to change when rates go up or down. When rates were going up they were often one of the first banks to bring up their deposit rates.
falling interest rates could mean that the economy is slowing. so if the rates fall fast, wouldn't that mean that the reserve bank is worried that we might fall into recession so they decide to cut rates quickly? although, interest rates are quite high right now so like you said, they could just be easing because inflation is under control rather than because the economy is slowing significantly.
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Permalink Reply by Bandwidth on -
Recession is part of the cycle, We all need to be welcome to the real world. :-)
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Permalink Reply by MoneyMagnet on -
Interest rates are changing daily at the moment. Interest rates on term deposits are falling but so too are the fixed rate home loans. They seem to go hand in hand. I dísagree that the interest rate will fall that far. I think that inflation figures will keep the RBA on a course of conservatism in that front. They did seem to pull the handbrake on way too hard and now they are easing it off to stop the fishtail. Also unemployment is on the rise due to manufacturing slowdowns which also influences the RBA. Interesting times indeed.
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