These are the banks with the highest term deposit rates in 2014 for two core terms.
They are their 'at maturity' offers for deposits of $10,000 or more.
They are also 'before tax', and represent what was offered in the last week of each month.
For banks that offer term PIEs, savers might get an even better after tax return using these funds.
Use our handy deposit calculator to work out your likely actual after tax return here.
The bank who consistently offered the highest six month rate in 2014 was Kiwibank - they feature eight times in our table, and in every month from July onward. RaboDirect and the Co-operative Bank are also prominent in the list featuring six times each.
The bank who consistently offered the highest one year rate in 2014 was RaboDirect achieving the 'best offer' position in five months.
(The rates in parentheses in the table are the average of all bank offers.)
| Term deposits | 6 months | offered by ... | 12 months | offered by ... |
| January 2014 |
4.10% (3.84%) |
Kookmin Bank |
4.30% (4.05%) |
Kookmin Bank Bank of India |
| February |
4.10% (3.84%) |
Kookmin Bank |
4.30% (4.06%) |
Kookmin Bank Bank of India |
| March |
4.10% (3.87%) |
Co-operative Bank Kiwibank Kookmin Bank |
4.30% (4.08%) |
Kookmin Bank Bank of India |
| April |
4.10% (3.92%) |
Co-operative Bank Kiwibank Kookmin Bank |
4.35% (4.13%) |
Kiwibank |
| May |
4.25% (4.01%) |
RaboDirect |
4.50% (4.23%) |
Heartland Bank |
| June |
4.25% (4.04%) |
RaboDirect |
4.50% (4.29%) |
Co-operative Bank Heartland Bank Kiwibank RaboDirect |
| July |
4.50% (4.14%) |
Kiwibank |
4.60% (4.37%) |
Co-operative Bank |
| August |
4.50% (4.13%) |
Co-operative Bank Kiwibank RaboDirect |
4.65% (4.39%) |
RaboDirect |
| September |
4.50% (4.13%) |
Co-operative Bank Kiwibank RaboDirect |
4.65% (4.41%) |
RaboDirect |
| October |
4.50% (4.14%) |
Co-operative Bank Kiwibank RaboDirect |
4.65% (4.43%) |
RaboDirect |
| November |
4.50% (4.15%) |
Co-operative Bank Kiwibank RaboDirect |
4.65% (4.43%) |
RaboDirect |
| December |
4.50% (4.14%) |
Kiwibank |
4.60% (4.43%) |
Co-operative Bank Kiwibank SBS Bank |
For some, perhaps one somewhat unexpected thing stands out in this analysis: for both terms, rates actually rose as the year progressed.
That was because the RBNZ increased the OCR.
But banks did not pass on the full OCR hikes that happened in 2014. The RBNZ raised their benchmark policy rate by a full +1% (from 2.5% to 3.5%) in the first half of 2014 but banks passed on only 0.3% of that - or 0.4% on a 'best rate' basis. (In fact, none of the big Aussie-owned banks feature in our table.)
The reason: banks are flush with deposits because households are building their bank accounts faster than they are borrowing. Household bank accounts rose $10.2 bln in 2014 to $134 bln while housing debt rose 'only' $8.3 bln in the same period. Consumer debt rose another $0.8 bln as well.
And banks have the option to borrow more cheaply offshore.
Theoretically savers have offshore options too, but they are not very practical for most. And almost all other countries offer lower rates to savers than are available here. Saving interest rates fell in the rest of the world which is in contrast to our rises.
In fact, in Australia at the end of 2014, the 'best offer' for a six month term deposit is 3.75% and the 'best offer' for a 12 month term deposit is also 3.75%. Most main banks offer up to 0.50% lower than these.
Saving in New Zealand has one other attribute that few major economies can offer - interest rates offered are higher than inflation, even after income taxes are deducted. While they may not be high and compare poorly to those offered in the unsustainable 2004-2008 period, returns are positive and 'real'. The full force of 'financial repression' has not imposed itself here (- yet?).
Term deposit rates
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29 Comments
Who benefited from asset price inflation in Auckland, given that deposits have been increasing. Who will eat the losses if it goes very pair shaped. Also regarding financial repression, if you include auckland houses in the inflation index, then auckland depositors have been savagely repressed. .
Maybe because consumers buy houses...
Fact is that when the RBNZ and Stats NZ decided that CPI should not include the price of existing homes (c 1999 I recall), property prices uncoupled from their main driver - interest rates, so that we had periods with low interest rates and soaring house prices eg 2003, 2004 and then crashing house prices and soaring interest rates eg late 2007, 2008.
Excluding house prices from CPI because they are assets has been proven wrong, yet economists are too pig headed to rescind their nonsensical viewpoint, leaving the rest of us with a boom, bust cycle which in general impoverishes the vulnerable and enriches the rich...
No it hasnt been proven wrong, it has been proven correct.
Houses are not consumed but are an asset. By the same argument you should also include shares, and other investments and no you should not.
Besides which CPI shouldnt be used to set the OCR but core inflation should ie excluding fuel.
On top of that house prices are not rising uniformly across NZ, ergo you would cause yet more hurt to the National economy just because some well to do areas are over-heating.
What you need is a good measure of the economy overall not some measure of how stupid some ppl are being.
Vehicles, domestic furniture and appliances etc are included but are assets that depreciate at varying rates just like existing buildings.
Something that is the major expense of two thirds of consumers being not included in CPI just distorts everything.
Please remember that all these economic measures are completely arbitrary things made up by small minded economists, they are not fundamental and incontrovertible like the laws of physics!
Question: has excluding this measure made the economy and interest rate management better? Answer: NO. (The current strength of the economy relative to the rest of the world is mostly due to insurance inflows and unsustainable immigration not good management, although the goof ball bank economists et al would probably disagree, but some of them think they are better of renting.... Good luck!)
Hi David. It's Becasue I want to accurately measure the loss in purcasing power of my NZD !. To do that I think I need to include include gold, silver, house prices and a bunch of other real stuff into my index.
Here's a snippet from the Statistics New Zealand 2014 CPI review.... This allows us to use sophisticated methods to measure price change. We are using the Imputation Tornqvist Rolling Year GEKS (ITRYGEKS) method, which accounts for quality changes by imputing the ‘missing prices’
Missing Prices... what a load of crap! They're using hedonics to massage the CPI lower. That's totally divorced from the real world.
fat pat... I agree
ive found Total NZ house price growth is a good proxy for measuring the declining purchasing power of $NZ.
Since mid 1980s' m3 has averaged 6% growth
House prices over the same period ( mid 1980s' - present ) have also averaged 6%/yr.
Doesnt surprise me.... thou there is no economic law that says money supply growth should manifest itself ..as an effect.... in house prices... but so far it seems to have ..... ( Iv'e become a watcher of the Credit aggregates )
You are right about the understating of the CPI.... in my view.
AND.... I do acknowledege that its a very grey area.....
I'm thinking that The Governor of the Reserve bank now has a close eye on the Credit aggregates.... as much as he does the CPI... ( pre GFC they only looked at CPI.. I think )
fat pat... I agree
ive found Total NZ house price growth is a good proxy for measuring the declining purchasing power of $NZ.
Since mid 1980s' m3 has averaged 6% growth
House prices over the same period ( mid 1980s' - present ) have also averaged 6%/yr.
Doesnt surprise me.... thou there is no economic law that says money supply growth should manifest itself ..as an effect.... in house prices... but so far it seems to have ..... ( Iv'e become a watcher of the Credit aggregates )
You are right about the understating of the CPI.... in my view.
AND.... I do acknowledege that its a very grey area.....
I'm thinking that The Governor of the Reserve bank now has a close eye on the Credit aggregates.... as much as he does the CPI... ( pre GFC they only looked at CPI.. I think )
Simple Auckland depositors can take their money else where.
Instead they want a high[er] risk free rate of return because they are too scared, financially illiterate, or too lazy to work for it.
The fact taht there is more money on deposit than is wanted, well that should be telling you the state of the underlying business economy, not good.
Steady on mr money illiterate - those deposits primarily represent the non-foreign portion of mortgage debts NZers rack up for shelter.
And where might those same depositors seek refuge if they so wished to create a bank run on the nigh on impossible to liquify mortgage debt they currently underwrite?
And don't ask me. I only lend to banks as a charitable act when the bond market takes a breather and the chip size is generally only suitable for those with foreign resources.
Sure Im not terribly money literate, mind you I class those that are as mostly parasitic by the looks of it.
Not my/the problem where they run to. Im just getting sick of the whinning that they are not getting paid enough for what is a as close to a risk free investment as you can get that will probably get bailed out by me the tax payer and my kids as tax payers as well when it goes south.
Given the OBR and given the x2 or more housing and farming bubble I wouldnt have much money in a Bank deposit account, I'd be going to ask for professional advice and not whinning.
Absolutely hilarious.
The fact that bond yields declined, credit spreads widened and the dollar rose over the past year demonstrates how atypical the current monetary policy cycle has been relative to previous cycles.
This atypical behaviour can be partly explained by the offset that the ECB and the BoJ provide to the Fed's tapering. Based on our revised call about sovereign QE by the ECB, we project that G4 central banks will purchase more bonds in 2015 than last year. We expect the ECB and the BoJ together to purchase $1.3tr of bonds this year relative to the $1.0tr that last year was bought by the Fed and the BoJ. And this is having a dramatic on global bond demand and supply. In our Nov 14th 2014 F&L report, we projected that the balance between supply and demand, i.e. excess supply, will widen from -$485bn in 2014 to -$412bn in 2015. But our revised call about sovereign QE by the ECB implies $200bn more of bond purchases and thus a balance between bond supply and demand that is closer to -$600bn for 2015, i.e. even more negative than last year. In other words, the demand/ supply backdrop is even more likely to remain supportive of bond markets this year. On our calculations, the balance between bond demand and supply has been supportive of bond markets during most of the post Lehman period years with the exception of 2010 and 2013. The wildcards of our bond demand/supply analysis are our estimates of bond fund demand by retail investors, the bond buying by commercial banks, the supply of spread product in Europe and the speed of asset allocation changes by GPIF. Read more
Stephen i worked 18 hour days sometimes seven days a week for 30 years,by working so many hours i hardly had time to spend income so accumulated a reasonable quantity and then retired,so yes it does concern me as the return on investment pays the bills.
If i was able to continue working until the grave perhaps i might avoid becoming a parasite ?
Are we all not glad that we do not live in China. They treat old people abominably and take all their hard earned money and shift it overseas.
(Then bring their own elderly with them, at least, some do, even if they speak no English, English wants em.)
Their billion/trillion dollar boom, did not benefit the peasants. But it did benefit the people who preyed on them.
Maybe we can take great comfort in our treatment of the elderly. All we do is build little boxes and overcharge them with leased apartments and built in fees. Plus hospital fees, naturally, till the end of their days. So do not gripe if you X boxed children do not get to inherit a freehold unit.
But my main point is, it is not all rosy in China, nor here as we are all being milked, unless in the know.
http://www.bloomberg.com/news/2015-01-12/let-me-die-chinese-mother-says…
Sometimes it is the end result, we should be looking at, plus who we have to thank for our demise.
Taint always the elderly, it is those who prey on the gullible. Plus benefit off course.
Wen and a Li are not so beneficial to their elderly, nor Hu we should aspire to, if the above is the end result.
http://en.wikipedia.org/wiki/Wen_Jiabao
http://en.wikipedia.org/wiki/Li_Keqiang
http://en.wikipedia.org/wiki/Hu_Jintao
Happy New Year.
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