This morning, Kiwibank has trimmed all its term deposit rates for terms of two years and longer.
Yesterday, ASB did the same for terms longer than one year.
This week's moves follow on from similar downward changes by ANZ last week.
Term deposit investors are facing a sinking market.
This is a market driven by lower wholesale rates.
And those are driven by lower international benchmark rates.
We are currently in a transition period where some banks have reduced their offers and others are yet to. That gives a small window in which to lock in some higher, longer term rates before they too disappear.
For example, both Co-operative Bank and SBS bank are still offering 4.70% for 18 months, closely followed by RaboDirect at 4.65% - and these rates are above the 4.50% level where the main banks are settling.
For two years, 4.85% is still available from the same two second-tier banks, a nice premium above the 4.60% from almost all main banks.
For three years, Heartland Bank's 5.15% stands out being 45 bps above the main banks.
And for five years, Heartland Bank's 5.70% offers a 70 bps advantage over where main bank rates seem to be settling.
How long these advantages will last is unknowable, but in the short-term at least the pressure will be on all banks to lower their offers.
Use our deposit calculator to figure exactly how much benefit each option is worth; you can assess the value of more or less frequent interest payment terms, and the PIE products, comparing two situations side by side.
All term deposit rates for all institutions for terms less than one year are here, and for terms one-to-five years are here.
This positions the latest offers as follows:
for a $20,000 deposit | 6 mths | 1 yr | 18 mths | 2 yrs | 3 yrs | 5 yrs |
4.10% | 4.40% | 4.50% | 4.60% | 4.70% | 5.00% | |
4.15% | 4.40% | 4.50% | 4.60% | 4.70% | 5.00% | |
4.10% | 4.50% | 4.55% | 4.60% | 4.75% | 5.05% | |
Kiwibank | 4.50% | 4.60% | 4.60% | 4.75% | 5.05% | |
4.10% | 4.50% | 4.60% | 4.70% | 5.00% | 5.30% | |
Co-op Bank | 4.20% | 4.30% | 4.70% | 4.85% | 5.00% | |
4.40% | 4.50% | 4.65% | 4.75% | 5.15% | 5.70% | |
HSBC Premier | 4.00% | 4.20% | 4.40% | 4.50% | 4.70% | 5.10% |
4.35% | 4.55% | 4.65% | 4.80% | 5.00% | 5.45% | |
SBS Bank | 4.35% | 4.60% | 4.70% | 4.85% | 5.10% | |
4.00% | 4.40% | 4.50% | 4.65% | 5.00% | 5.30% |
Term deposit rates
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16 Comments
Externally the only country/economy of size left "doing OK" is the USA and that looks rather bad right now in shale oil and its junk bond feeding. Then everything is so interlinked and complex and rotten (like EU) that I cannot see why the OCR will be rising unless the NZRB is determined to commit suicide at year's end.
As for no deflation looking at the CPI I think its quite possible with petrol's drop we will see damn close to 0 in the middle of the year.
True - we'll probably be at 0.8% after tomorrows CPI and a bit lower than that after April's one, but the modelling I've seen would suggest it needs alot of other factors to come into play to get to deflation in 2015 - hey, oil goes to $5 a barrell and stays there all year, Kiwi goes back 88cents etc, yup anythings possible, just thats not where the odds are (such as you can assess them in the globe at the moment where only one thing is certain, volatility).
Its strange how deposits have gone up in the States with record low returns.
http://research.stlouisfed.org/fred2/series/WSAVNS
I know a lot of money is out chasing yield but I would have though Gold would have looked good if you thought inflation was a risk, does the fact that so much money is sitting on deposit signal a belief that we are going to in a deflationary environment?
I was reading about a sheep farmer in the South Island complaining that he was only getting a %2 to %2.5 return on investment, which is actually quite good in the world we live in today, he should stop complaining.
Just watch for the next CB to trip up.
It will be interesting to see how oil plays out this year.
Watching how the big oil players manoeuvre around the board will be interesting in 2015......I'm thinking there will be a massive buy-up from the big players as those who struggle to stay afloat at todays prices abandon at pace.....Oil prices will then increase as the supply-side is back under the old boys.......the game being played around the world is all about creating inflation and it is highly likely the oil industry will be the industry that creates that inflation.
It is interesting to look at M3 money forecasts on sites like this.
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