Savers' interest rates have been falling since the Reserve Bank cut the Official Cash Rate last week, with greater alacrity from some banks than mortgage rates.
As of Monday afternoon, a range of banks including Kiwibank, TSB, ANZ and BNZ have cut the interest rates being paid on a range of savings products. Westpac made a series of cuts before the Reserve Bank lowered the OCR by 25 basis points to its record low of 2.25% last week.
ANZ, which made headlines for passing on just 10 basis points of the OCR cut to its floating mortgage rate customers, has dropped its online savings interest rate by 25 basis points to just 0.75%. It has also cut its Cash PIE rate by 25 basis points to 0.75 basis points. And ANZ has cut its "School Plus" savings rate by 25 basis points to 1.20%.
Kiwibank has cut one, three, six, nine month and one year term deposit rates by between 15 and 55 basis points. It has also cut two, three, four and five year rates by 20 basis points. The 55 basis points cut to Kiwibank's one month rate takes it to 1.75%, which is still higher than some rivals.
BNZ and TSB, which at the time of writing, have yet to announce any changes to home loan rates since the OCR cut, have taken the red pen to some savings rates. TSB has dropped its three month, nine month, one year and 15 month term deposit rates by between five and 15 basis points. BNZ has cut its "Personal Oncall" and "Business First Oncall" rates by 25 basis points to 1%, and its Cash PIE rate by the same amount to 1%.
Westpac cut one month, three month, six month, nine month, one year and 18 month term deposit rates by between five and 25 basis points, with its one month rate down 25 basis points to 1%. The red bank also cut its two, three, four and five year rates by five basis points. Westpac's Online Saver rate has also been dropped 25 basis points to 1%, as has its "Simple Saver" youth account.
Both Westpac and Kiwibank have cut Term PIE rates including for three months, six months and one year terms. Westpac's cuts range from five to 16 basis points, Kiwibank's between 15 and 31 basis points. Kiwibank and Westpac's three and six month rates are now the same, however Kiwibank's one year standard rate is five basis points higher than Westpac's at 3.30%. Westpac has also snipped 25 basis points off its Online Saver PIE and Online Bonus Saver PIE rates, dropping them to 1% and 2.75%, respectively.
See all advertised, or carded, term deposit rates for one to nine months here and see all term deposit rates for one to five years here.
Term PIE rates are here. And other savings rates can be found in the right hand column of our saving page here.
42 Comments
Old folk will spend less or tap into their capital so even if rates increase later their spending will be less. Low rates are depleting savings and borrowing on a mortgage can only support spending for so long in a no inflation environment.
Everything that happens now leads to less spending by everyone in the future. Either by reduced savings or increased demands on mortgage servicing.
All negative geared housing speculators are doing is converting their taxable incomes to tax free capital gains. As tax payers we shouldn't be providing social welfare to these bludgers.
Tax write offs for property need to be paired with revenue from property only. If they have more tax write offs than taxable revenue then no further write off should be given. Property should be run as a business not as a hand out.
e: To more specifically answer your question they start making a profit. Paying tax on a profit isn't a big deal. No point them complaining about it as it'd be like someone complaining that they had to pay $1m in tax for the year.
nope. you're hearing right. i'm gen x and that's exactly what's being sold to us. i've just cashed out of nz property and got rid of all my debt because, well, it feels like a big monkey off our shoulders and i just don't believe the property/lifestyle carnival barkers out there. this new paradigm this time it's different bull***t is just that. it's musical chairs and there'll be almost nowhere to sit. but when the music stops, i have no idea. if i did, i guess i'd be rich.
The removal of moral hazard the RBNZ heralded in one of it's seminal documents determining the introduction of OBR stated the following -
Unsecured creditors include a wide range of individuals and entities. At one end of the spectrum, there are large international financial institutions that invest in debt issued by the bank (commonly referred to as wholesale funding).
At the other end of the spectrum, are customers with cheque and savings accounts, and term deposits. Whilst there are differences between different classes of unsecured creditors, they all have the same legal claim on the bank. Each has freely invested in a private institution and has enjoyed a return on that investment whilst accepting the risks associated with the investment. Under the OBR, it is expected that all unsecured creditors would be treated equally with the same proportion of claims remaining frozen for all depositors and creditors.
Given ANZ's claim -
In its statement announcing the 10 basis points cut to its floating and flexible home loan rates, ANZ said over the past 18 months offshore wholesale funding costs had increased significantly. International volatility had proved to be more than temporary, and these extra costs now need to be reflected in ANZ's lending rates.
- the RBNZ has reintroduced moral hazard in so much as the governor's actions have secured the banks' rights to impose different and in most cases little if any risk return factored in the posted interest rates offered to NZ's unsecured depositors.
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They simply don't care mate, depositors are the accepted 'collateral damage' by the RBNZ and I might add our government. Depositors must decide for themselves to stay in the losing game or get out now while the game is still going. By 2018 it may be all over for depositors as far as choices go.
Two points.-
1) Janice Yellen US Federal Reserve Chair makes just over $200,000 (US) per year - but then she's got a much simpler job than our Mr Wheeler it seems.
2) nonetheless Mr Wheeler should have little difficulty in paying the 3.8% increase in Wellington City rates this year - WCC is doing their best to help RBNZ get the inflation rate moved upwards - though rates hardly rate (so to speak) in the CPI basket of measurable things that actually matter to ordinary folks.
Stephen, that isn't obscene. What is obscene is that Theo Spierings pay rise alone last year was more than the RBNZ governor's total salary. From the RNZ website July 2015:
'Chief executive Theo Spierings earns $4.18 million per annum, following a $660,000 pay rise the previous year'
How is this justified while people are losing jobs?
The system doesn't make any sense and must change.
Banks won't stop creating deposits.
The Reserve Bank's 'experimental' housing loan approval series shows that mortgages totalling $1.679 billion were approved in the week ended March 4.
That surpasses the previous record of $1.591 billion set as recently as the week ending December 18, 2015. Read more
As we all know from the BoE disclosure - "Rather than banks receiving deposits when households save and then lending them out, bank lending creates deposits" Read more
These statements by the RBNZ are exactly at the crux of the matter. unsecured creditors read general public depositors, and then the most amazing statement of all Each has freely invested in a private institution and has enjoyed a return on that investment whilst accepting the risks associated with the investment BS! The average Joe public doesn't have much of a choice! Try getting your wages in cash these days. The banks have made it impossible if not unaffordable, and freely investing? All the banks are pretty much the same, and as for the risks. The banks hide the risks from most. Only educated observers can identify them, and when all banks operate on the same precarious models, what alternatives are there? The average man on the street is being robbed, they have a gun at their head, and it is being jointly held by banks, the RBNZ and the Government.
Adding to my above, take a look at the other article from the ANZ here on the high levels of household debt. More proof that the public has bought into the bank model, and in their willingness the banks have put themselves into a precarious position where they are hugely vulnerable to any financial collapse. Thus the risk factor is huge, but depositors don't get it in their interest rates, and again no alternative other than the mattress.
The continued war of 'cash'
It's simple what they (banks, RBNZ, governments) want us ALL to be forced to do. BORROW for life to death.
IF we stop borrowing....then no 'new' currency is created to replace the currency that we used to make those previous payments for whatever.... No new currency means no more interest being collected, no more taxes to collect. The phony economic growth model based entirely of DEBT growth falls over.
It's inevitable though that it will fall over as this system is so flawed that normal life spans for such scams are 30-40 years. Bail outs can/do occur but become less effective each time.
Our entire monetary system is a system of legalized theft and the key (specifically for US citizens) is the fact that the US FED has 'secret' stockholders. No real Federal agency has stockholders.
What i dislike from a NZ perspective is our own RBNZ relationship and meetings with this bogus agency.
This system steals future prosperity from each generation to the next. How can such a system continue? It can't, it won't, but my greatest fear is how bloody it will become when it falls over. It will not be a 'rose' revolution.
Whoa there Justice - the twelve regional Federal Reserve Banks are privately owned, but are overseen by a US government agency, namely - the Board of governors of the Federal Reserve System.
Proof of US government control - Fed Sent Record $97.7 Billion in Profits to U.S. Treasury in 2015
Additional $19.3 billion was transferred to Treasury as required by highway bill Read more
Stephen,
A cynic, not me, may wonder if those sums are like the pieces of silver and judas.
Congress are trying to find an angle to explore if the Fed is an appropriate overseer of the private banks and it isnt easy.
I believe the US govement had the system foisted on them by J P Morgan etc during a a crisis but you may know more
I believe the FED charges interest on every dime asked to bring into existence and has never been audited since its inception. I believe rats own it....hence the smell from the place. Who's getting the 6% dividends?
Who produced the TARP funds from thin air? How much does 97 billion compare?
Hypothetically - some context
A retiree who retired with a superannuation nest egg $1 million, cashed out, and put it in the bank receiving 0.75% interest will receive the princely sum $7,500 for the year, before tax
Try living on that
"They" dont need to increase the eligibility age for National Super - the banks are killing them
Same retiree could buy $1 million house, rent it out, and receive $30,000 (minimum) in rents (gross)
Iconoclast - not sure you're comparing apples with apples.
Unlikely that a retiree would have his nestegg on all access savings account at 0.75%. Assuming he doesn't need capital return (your example assumes that by saying he can't live on $7500), he could spread his funds over a range of term deposits and attain 3%+ in this market for the same risk.
That's the same as the rental return you speak of (without agency fees, maintenance, insurance and risk of no tenants etc).
Alternatively, many index tracked funds return a greater yield.
I did and do realise all that - what I'm simply trying to demonstrate is at that bank rate a $1 million deposit in a basic account will earn a mere $7500 - that's pathetic
Let's make it 1,000 people, each with $1,000 in the bank, each receiving $7.50 in interest
With $1,000 you don't have many choices
MisterB explained your hypothetical is so fantastic as to be worthless. Who invests $1m at 0.75%? No one...
Furthermore, old folk need to either get more productive with their funds or start living off the capital. Milking others through usury is the role of the banks and they do not like competition.
Regulation is only as good as the regulator. Bitcoin is decentralised and currently mostly unregulated, but is driven by the truest market force of supply (mining) and demand. Because it's decentralised, there can be no artificial propping up of the currency by regulatory authorities. In my mind that's a very good thing.
Is this the way of the future - a disruptive future for financial institutions?
http://www.telegraph.co.uk/business/2016/03/13/central-banks-beat-bitco…
The disruption's coming from a host of directions. Every central bank has two purposes: to keep the system going, and to seek local competitive advantage. Both rest squarely on increasing production and consumption – the two-headed god of ‘growth’. Dutiful worship of this god, which was established to benefit private finance, provides the many with material goods, and the few with extremes of wealth. After a time, though, the mounting proliferation of goods, and the insatiable demand for wealth, can only be funded by ever expanding loads of debt – a charge on the future. It is a modern feudalism, ensuring the servitude of the many for the benefit of the few, and condoning theft from the future for the benefit of those now. The good of society, even the future of life on the globe, don’t come into it. The choice is to enter and support a system of bondage, or find a means, as far as possible, to exit it. That will be the real disruption.
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