Today is the final day that AMP will be offering its premium over Heartland Bank term deposit rates.
That premium is +10 bps.
It means that the expiring AMP offer is for 6.35% for a six and nine month term. Links to that offer are in our term deposit tables (click on the logo).
All AMP's "launch specials" will fall back to equivalent Heartland Bank rates at the close of business today.
While we are talking about 'specials', BNZ also has one, its 6.15% pa rate for a six month term deposit. That expires soon too, on Wednesday, July 17, 2024.
Recent financial market moves following the latest RBNZ monetary policy signals mean that it is highly likely that these rates represent the high-water mark for term deposit offers. That view will either be confirmed, or changed, when the CPI rate for the June quarter is released next week on Wednesday, July 17, 2024.
This will be pivotal in determining when the RBNZ actually cuts rates.
Financial markets have priced in a 50/50 chance of a -25 bps rate cut at the August 14, 2024 meeting. They have a full -25 bps cut priced in from today for the October 9 RBNZ review. And they have another fully priced in for the November 9, 2024 meeting.
But financial market pricing is fickle, responding easily to economic and regulatory signals. Before this week's RBNZ MPR, it saw nothing like such an aggressive cutting schedule. So we should expect different market pricing if the June CPI data surprises.
In March, the CPI ran at 4.0%. The RBNZ is on record in its assumptions as picking a June drop to 3.6%. Bank economists vary but their range sees a June rate down to possibly as low as 3.3%. A Massey 'live' inflation tracker suggests the range for June is quite wide. Check back later when we will have a full review of all these views.
The point is, hardly anyone thinks June inflation will rise from March - or even stay little-changed. But a surprise like that would be a real market-mover.
The balance of risk at this point is that term deposit rates at 6% or more from almost any bank for any term are likely to fade away quickly by the end of the month, possibly even by the end of next week.
And there is another powerful reason term deposit rate offers might fall quickly soon - a lack of loan demand. Banks compete for funding to support their lending activities. But if loan demand stays weak or even weakens, there is no good commercial purpose by banks to promote deposit activity or win more share. In fact, if loan portfolios backslide the incentive will be to let their deposit books shrink in unison. "Attractive rates" would then disappear, probably across the board.
We should also point out that after-tax returns can be enhanced for some savers with higher tax rates, by the choice of PIE structures. Not all banks offer these, but most of the main banks do. For a nine month bank offer, they can be boosted by about ~30 basis points going this way. In some cases that will make up any difference, or more.
Always ask a bank for a better rate. Many bank staff have discretion to offer more than the advertised rate. (And check your bank's app offers as they too are often enhanced to retain you).
Use the term deposit calculator here, or the one below the table, to calculator your expected net returns.
The latest headline term deposit rate offers are in this table after the recent increases.
| for a $25,000 deposit July 12, 2024 |
Rating | 3/4 mths |
5 / 6 / 7 mths |
8 - 11 mths |
1 yr | 18mth | 2 yrs | 3 yrs |
| Main banks | ||||||||
| ANZ | AA- | 4.30 | 5.90 | 6.00 | 5.90 | 5.90 | 5.65 | 5.30 |
 |
AA- | 4.40 | 5.90 | 6.00 | 5.90 | 5.70 | 5.40 | 5.20 |
 |
AA- | 4.30 | 6.15 | 6.00 | 5.90 | 5.85 | 5.60 | 5.25 |
 |
A | 5.00 +0.50 |
6.05 | 6.00 | 5.90 | 5.60 | 5.25 | |
 |
AA- | 4.30 | 5.80 -0.10 |
6.00 -0.05 |
5.80 -0.10 |
5.70 -0.10 |
5.50 | 5.30 |
| Other banks | ||||||||
| Bank of China | A | 5.50 | 6.20 | 6.20 | 6.15 | 5.95 | 5.70 | 5.35 |
| China Constr. Bank | A | 5.50 | 5.80 | 5.90 | 6.00 | 5.85 | 5.65 | 5.40 |
| Co-operative Bank | BBB | 4.30 | 6.05 | 6.00 | 6.00 | 5.80 | 5.70 | 5.35 |
| Heartland Bank | BBB | 5.50 | 6.25 | 6.25 | 6.20 | 6.00 | 5.90 | 5.80 |
| ICBC | A | 5.40 | 6.15 | 6.15 | 6.20 | 5.95 | 5.70 | 5.40 |
| Kookmin Bank | A | 4.40 | 5.60 | 5.70 | 6.00 | 5.00 | 4.60 | |
 |
A | 5.05 | 6.15 | 6.20 | 6.30 | 6.10 | 5.90 -0.20 |
5.60 -0.30 |
 |
BBB | 4.20 | 6.05 -0.05 |
6.05 -0.10 |
5.95 -0.10 |
5.80 | 5.50 | 5.30 |
 |
A- | 4.25 | 5.90 | 5.90 | 5.90 | 5.80 | 5.50 | 5.30 |
Term deposit rates
Select chart tabs
Daily swap rates
Select chart tabs
Term deposit calculator
29 Comments
yes, and with really high council rates coming in the next 5 years, and really high insurance now, its just not as much fun as it used to be in the housing market. Also the DTIs - don't forget the house you live in is also in your DTI, so a lot harder to buy a second one for the next generation.
You fellas are both in la la land maybe…just different neighbourhoods eh, I agree with you & don’t think that property prices are going to go berko…but I also agree with him that if the OCR drops & the one year chalkboard rate has a 5 in front of it then it most likely will have an effect on house prices…you two need to have a nice wee la la land neighbourly catch up 🤷🏻♂️😂
I also think there is some pent up demand. I suspect there is "a lot of money" sitting on the sidelines, waiting for house prices to drop, while earning lots from TDs in the meantime. When TD and mortgage rates will start to drop that money will start to pour into real estate once again.
I will not be surprised if most people reading this comment know of someone with a deposit saved up and patiently waiting for the right time to buy a house. If I am correct that's a lot of people who will compete to buy a house when their time comes.
Inverse yield curves persists but track towards zero, OCR remains higher than inflation as inflation tracks downward towards the magic 1-3% range at a rate of 2% per annum.
Time to think about adjusting the OCR. A question I have is whether they might change now so that the flow on effects start materialising in a year, or wait another 6 months and bottom out at 1% CPI?
Was 'normal' really that good?
Granted the current environment is objectively worse for many in contrast, but that's indicative of how incredibly fragile the status quo was.
The only question now is whether central banks will intervene before contagion gets terminal, or after.
But financial reinvention is the only play left in the book.
Why on Earth would you do that? 5.2% pa when levering that $200k you've got into $1,000,000 of mortgage Debt to be ploughed into the property market; today, if your local R/E agents is to be believed, and in 5 years time that $1,000,000 property will be worth $5,000,000, and you'll have realised a return of 1,000 times the yield on a Term Deposit, all tax-free, now, if you are prepared to lie with a straight face - sorry, 'structured the asset properly'.
And that, is what's coming if we drop the OCR. People will spend and borrow and prices will surge, and to reign in the runway 'inflation' (sorry again, Capital Gains. That's not Inflation...) the RBNZ will have to do what? Raise rates 'a bit' won't be the answer.
Story: The neighbourhood has had yet another property added to the local property market. Last week, before the official Open Homes started, the R/E agent trundles their local cohort of investors through the property to see if they wanted the first bite at the as yet unlisted property. Without a doubt, 90% of them would have struggled to beat Joe Biden across the road. They weren't young, to put it kindly. But that's where the investor demand is. It is the aged who have the money/collateral, and it is they that are going to apply any funds they have, regardless of risk ("Property always goes up" after all!).
The last govt were the evil ones...slowly but surely destroying NZ's economy with their "clean, green" BS. Taxing the industries that this country survives on for its existence, while endlessly promoting the 'global warming' nonsense.
Desperate to show the world how NZ could somehow run on battery vehicles, while shafting the airlines, tourism, motor industry, farming, mining, oil and gas.
Chippy and Comrade Arden were going to show the rest of the world how it was done. While impoverishing the population.
We welcome your comments below. If you are not already registered, please register to comment.
Remember we welcome robust, respectful and insightful debate. We don't welcome abusive or defamatory comments and will de-register those repeatedly making such comments. Our current comment policy is here.