The central bank (Eesti Pank), reports that the volume of term deposits increased from € 1,4 billion to € 2,4 billion over the course of the past year.

"It has expanded significantly over the past two quarters." Taavi Raudsaar, an economist at Eesti Pank, said.

At the moment, banks offer a minimum one-year term deposit with a 4 percent interest rate, and there is little room for improvement.

"Given that the average interest rate of time deposits in most banks today is 4 percent, a major increase is unlikely, although it may climb slightly, and certain banks that want to grow quickly and require more money may make promotional offers," Raudsaar said.

This is what happened at Coop Bank in January, when it offered a 5 percent annual interest rate on deposits for three weeks.

"The campaign exceeded our expectations. We received deposits, but more importantly, a big number of new customers," Paavo Truu, Coop Bank's chief financial officer, said. "We gained about three times as many new customers during the campaign period as we would have during the same period without the campaign."

Truu is not expecting a rise in deposit rates in the near future. Our current yearly deposit rate is 4.05 percent, which is comparable to other institutions.

Tõnu Mertsina, Swedbank's chief economist, confirmed the same. "The existing time deposit interest rate of 4 percent seems to be rather favorable, given the increased volume of time deposits, and we do not expect the need to raise this rate in the near future."

The average interest rate on new mortgage loans in May was 5.2 percent. The European Central Bank's policies have a significant impact on both loan and deposit interest rates.

"We are keeping an eye on how frequently the European Central Bank raises interest rates. It will rise by 25 basis points in July and probably again in September," Mertsina said.

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