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ASB lifts range of term deposit rates with five-year rate increasing 75 basis points to 1.75%

Personal Finance
ASB lifts range of term deposit rates with five-year rate increasing 75 basis points to 1.75%

ASB is increasing a range of term deposit rates, including lifting its five-year rate by 75 basis points to 1.75%, and its four-year rate by 50 basis points to 1.50%. The changes are effective from Tuesday.

Here's the bank's statement.

ASB is increasing its term deposit rates, including lifting the 60-month term deposit rate by 0.75% to a market leading 1.75%.

ASB’s Executive General Manager of Retail Banking, Craig Sims, says ASB is taking the opportunity to offer Kiwis with cash savings some highly competitive term deposit options while also balancing the needs of borrowers who have been benefiting for some time from an extremely low interest rate environment.

“While there’s been much focus on home loan rates, customers with funds to invest are often seeking to balance their portfolios, and term deposits can be an important part of the mix.

“Given the performance of the New Zealand economy through COVID-19 has been stronger than anyone anticipated and our commitment to helping the financial progress of all New Zealanders we’re pleased to be able to support our savers with these market leading term deposit rates.”

In addition to the new 60-month rate, ASB has also increased the rates for deposit terms from 9 to 48 months. The below rate changes are effective from Tuesday 2 March 2021.

See all banks' carded, or advertised, term deposit rates for one-to five years here. And see all banks carded, or advertised, term deposit rates for one to nine months here.

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21 Comments

"While there’s been much focus on home loan rates, we'd like to distract you with this announcement ... before we start lifting home loan rates."

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Come on now ASB, the FLP program is for lending. Not for reducing your overheads and passing on the difference to term deposits!!!!

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You don't call them Banks if they work for charities, lenders, borrowers - are all the same to them, the points to extract the $ from no matter what.
But then again, off course every drug addicts called their local drug suppliers as doing them a favor.. until?...the head turn to the other way.

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Think they are sending a signal to the RBNZ? Or something else?

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Think they are not cool with becoming obsolete and being replaced with git-coin or other

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GME has scared finance. They could be only a meme away from disaster for example houses being traded for something other than cash

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GME may have scared finance (maybe even scarred it!) but if it has, then any liquidation (of anything) that's coming will be into one commodity - cash.
Will that cash immediately re-enter illiquid asset markets born of Monetary Policy madness? I doubt it.

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Hard to say but certainly hasn't been the cleverest idea to provoke the younger gen by locking them out of property

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I totally agree. I may be an old fart, but I find following GME really insightful. Lots of anger and 'loss of hope' within the Reddit crowd.

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Agreed, collective action happens Extremely fast

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As I understand this, FLP is merely an asset swap - "The programme will require approved eligible collateral to be pledged" i.e. government bonds pledged for the period that FLP programme runs for cash that will be lent to individuals and businesses to purchase assets (i.e. an asset swap).

Please help me understand this better.

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It's a repurchase agreement between the RBNZ and each participating bank.

Proforma accounting before repo and after secured borrowing can be viewed here - EXHIBIT 2.

Notably there is no balance sheet expansion. Primarily the RBNZ will transform what may have been costly short term debt into longer term (3yr) OCR costed debt.

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So for a 12 month term deposit where I used to get a paltry 0.75% I could now be milking it with a 0.80% rate.
GAGF ASB, you are taking the proverbial.

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Yes, agree. The asb is saying it really wants to help out savers with its benevolent rates.
I say they are hurting for deposits to fund the real estate loans.
I for one have moved significant deposits out of their bank as my 5 year 5% TDs came due. They think I was going to leave it with them at .75%??? Or a paltry 1.75% . Too little, too late.
Bye, bye asb. Closing my accounts and moving offshore where they have deposit guarantees.

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Orr won’t like the look of that. Money printing machine will get a turbo boost this month.

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Still not good enough, especially with regards to the longer terms. In 2-3 years time, interest rates are going to be much higher than that - so there is no point going longer term now, when it is likely that interest rates will take off in a couple of years' time. Just look at how international markets are pricing bonds.

Moreover, considering the over-inflated NZ housing Ponzi, the likelihood of an OBR event within the next 5 years is not negligible, and savers are still not rewarded enough for this risk. If you stay cash, at least you can take your money away quickly at the first signs of trouble.
And if everybody waits before entering new term deposits, this will make an interesting environment for the profile of NZ banks' funding.
Savers should wait and see if other banks can at least significantly improve on this.

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ASB lifts range of term deposit rates with five-year rate increasing 75 basis points to 1.75%
A step in the right direction, given investors in the recent Westpac five year issue got stunned with a 1.439% per annum return. Isn't the lagging CPI indicator most recently recorded at 1.4%? No credit risk premium at all.

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Can't wait to get my TDs out near the end of the year and put most of the funds in overseas banks with Govt guarantees. I view the currency rate gamble I will be taking as a positive way to diversify and spread my risk. The TD rates in Thailand and the USA are even (much) lower than here but I don't care.

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How much of a TD are we really talking here ? I would rather buy a house in New Plymouth and rent it out than move mine offshore.

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But if the cracks start appearing in the banking system and you are locked in for 5 years unsecured.......
Not to mention IMO it is 50%+ chance rates will rise early next year.

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Woo Hoo here we go baby, the only way is Up. My 12 month TD is out in August so a lot could change between now and then.

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