Australia's big banks are quietly making significant cuts to the interest rates paid on term deposits, as lenders compete less keenly for household savings.

While the Reserve Bank has not moved official interest rates since August last year, new figures show interest rates across three-month, six-month and one-year term deposits have been cut in recent months.

Yield in the big four banks is not enough to inspire buying in challenging conditions, Watermark Funds Management says. Credit:James Davies

The cuts are likely to affect pensioners and self-funded retirees in particular, as rate reductions erode the income they receive from their retirement savings.

Three-month term deposits have fallen the most, with National Australia Bank, Westpac and ANZ all cutting these rates by at least 20 basis points since June, almost equaling an "official" RBA reduction, figures from comparison website RateCity show.