Westpac and TSB have both raised three, four and five year term deposit rates for deposits over NZ$10,000. This follows moves earlier in the week by BNZ, Kiwibank, Raboplus and ANZ National. Competition has been rising for the banks to secure more local funding while moving away from the 'hot' money on global wholesale markets, pushing up local deposit rates. In a somewhat ironical twist, this has pushed Kiwibank to raise funds offshore because of the stronger competition it is now facing locally. Westpac and TSB raised their longer term rates by between 25 and 100 basis points. They are both now offering 5.5% for three years; 6% for four years; and 6.5% for five year deposits.
At the same time, TSB raised its three month deposit rate by 25 bps to 3.75%. Westpac did a swap-around with its five and six month rates, lowering the five month by 110 bps to 3.5% but raising its six month rate by 80 bps to 4.6%. Banks have raised their longer term mortgage rates across the board in the last two weeks also as longer term rates globally have risen because of heavy borrowing by governments. Also, the Reserve Bank's move to force banks to raise more money locally and longer term has pushed up term deposit rates and therefore funding costs, despite the Official Cash Rate remaining flat at a record low of 2.5%.
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