It appears there's more upward pressure in the term deposit (TD) marketplace, even if it isn't showing yet for home loans.
Kiwibank has raised two key TD rates; the popular nine-month rate is up 35 basis points (bps) to 2.00% pa, and its one year rate is up 10 bps to 2.30% pa.
Kiwibank follows Westpac, which followed BNZ, which raised rates for a wider series of terms, the top one being for one year where Westpac now offers 2.40%.
And that was followed in turn by Rabobank, which topped them all with 20 bps increases on top of what were already attractive offers, making the rural lender the clear market leader in the term deposit market. Rabobank now offers 1.85% for six months, 2.05% for nine months, and 2.45% for 12 months. Further out, its 3.35% for three years is also a clear market leader.
Wholesale interest rate markets are barely open Tuesday for the new week, and expectations are that these background rates will rise on the back of the signals from the US non-farm payrolls employment report. The imminent US Consumer Price Index data for January will be influential in market positioning when it is released Friday (NZ time).
Even though we are in a period of 'financial repression' (that is, savings returns are less than inflation), for term deposit savers it will always be better to get a higher rate than not, to minimise the pressure on their nest-egg. Savers will hope the Reserve Bank can win its battle with inflation because inflation is a thief of savings. Some short term pain will be the cost as almost all savers are aware. But it will be much worse if the Reserve Bank doesn't succeed in taming inflation.
An easy way to work out how much extra you can earn by switching is to use our full function deposit calculator. We have included it at the foot of this article. That will not only give you an after-tax result, you can tweak it for the added benefits of Term PIEs as well. It is better you have that extra interest than the bank.
The latest headline rate offers are in this table.
| for a $25,000 deposit | Rating | 3/4 mths |
5 / 6 / 7 mths |
8 - 11 mths |
1 yr | 18mth | 2 yrs | 3 yrs |
| Main banks | ||||||||
| ANZ | AA- | 1.10 | 1.50 | 1.70 | 2.20 | 2.20 | 2.50 | 3.00 |
 |
AA- | 0.95 | 1.30 | 1.55 | 2.00 | 2.10 | 2.50 | 3.00 |
 |
AA- | 1.00 | 1.50 | 1.80 | 2.30 | 2.35 | 2.50 | 2.75 |
| Kiwibank | A | 1.20 | 1.60 | 2.00 +0.35 |
2.30 +0.10 |
2.50 | 2.75 | |
 |
AA- | 1.00 | 1.60 +0.10 |
1.80 +0.15 |
2.40 +0.20 |
2.40 +0.20 |
2.50 | 3.00 +0.20 |
| Other banks | ||||||||
| Co-operative Bank | BBB | 0.70 | 1.50 | 1.65 | 2.20 | 2.20 | 2.50 | 2.80 |
 |
BBB | 1.25 | 1.75 | 1.65 | 2.00 | 2.10 | 2.50 | 2.75 |
| HSBC | AA- | 0.85 | 1.35 | 1.50 | 1.85 | 2.25 | 2.60 | |
| ICBC | A | 1.35 | 1.75 | 1.85 | 2.30 | 2.35 | 2.75 | 3.10 |
 |
A | 1.00 +0.10 |
1.85 +0.10 |
2.05 +0.20 |
2.45 +0.20 |
2.55 +0.20 |
2.90 +0.20 |
3.35 +0.20 |
 |
BBB | 1.00 | 1.65 | 1.85 | 2.25 | 2.25 | 2.55 | 3.00 |
 |
A- | 0.95 | 1.50 | 2.00 | 2.20 | 2.10 | 2.50 | 3.00 |
Term deposit rates
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15 Comments
Inflation is a thief of savings (mildly true) . In current world of economics, the governments with their out of world policies are the biggest thiefs.
The current politics is not helping the people, they are only helping their vested interests.
How many politicians these days meet the working class citizens? Not even 5% of their time.
Most of the time they are between bureaucrats, industrialists and corporates. Attending gala dinners and sponsorship events.
They are not in touch with what's happening on the ground, the people issues. So how will they ever make policies which help the poor and the ones who really need them.
There is significant upward pressure on all swaps, worldwide and in NZ, and this is going to continue for the whole year at the very least.
Current term deposit rates and mortgage rates will rise significantly in the next few months - this is just the beginning of a global process of renormalization of interest rates.
I would not invest in any deposits for any term longer than 9-12 months, as by the time they expiry, rates will be much higher. On the other hand, if you are a mortgage holder you'd better fasten your seatbelt.
No seatbelts needed. Interest rates won't go to skyrocketing figures that you all seem to wish for. Will it go up? Most likely. But let's see how long this "inflationary" pressure stays for once COVID global supply chain disruptions disappear and global economies begin to stall again. Rinse, Repeat.
Housing should be the least of your worries.
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