Three of Australia's four major banks have quietly reduced interest rates on their term deposits. While they may claim this move is in anticipation of changes by the Reserve Bank, the central bank isn’t expected to cut rates for another three to six months.

Some might see this as a strategy to boost their margins, but the banks prefer to position it as a way to protect their profitability. Either way, it strengthens their bottom line.

Interestingly, this proactive rate reduction doesn’t extend to helping borrowers. Mortgage rates are expected to stay the same until the Reserve Bank adjusts the cash rate, which isn’t predicted to happen until December, and more likely early next year. While a few economists speculate a potential rate cut in November, they remain in the minority.

Even when the Reserve Bank decides to cut rates, it’s likely to be a small decrease of just 25 basis points.

Leading the charge, the Commonwealth Bank, Australia’s largest and most influential lender, reduced deposit rates by 50 basis points last week. Following suit, National Australia Bank trimmed its rates by the same margin on Monday, and ANZ went a step further with an 80 basis-point cut.

While there’s plenty of talk around mortgage rates, the impact on savers—especially older Australians who rely on interest income—doesn't get the same level of attention.

After 18 months of fierce competition, with banks offering aggressive mortgage discounts and higher deposit rates to attract and retain customers, it seems a truce is forming in the sector.

Although consumers enjoy the benefits of this competitive environment, it also puts pressure on the banks' margins and profitability.