The announcement from Westpac that they are trimming their term deposit rates further should not surprise any saver. The trend has been down for a few weeks now and the support for higher rates is falling away quite quickly.
And the Westpac 'rises' are not to any level that makes those particular offers especially competitive. It is just because they probably over-egged their earlier cuts.
Loan demand is weak and getting weaker, wholesale money markets are seeing rates fall, and competitive pressures are no longer important in this corner of the retail bank sector.
So expect this trend to continue.
[ Update: Rabobanks has also cut rates. See table below. ]
At this point on the last day of July, there are now few 6% or higher rate offers. Grab them quickly because they are sure to be withdrawn soon.
As we prepare this review, 6% or better rates are now only available from Kiwibank, Bank of China, China Construction Bank, Heartland Bank, ICBC, Rabobank, and TSB.
It is the Rabobank offers that stand above most others now. [See updates rates below. These change the story observations.]
But all these 6%+ rate offers are there with little bank enthusiasm. We suspect a quick blink and they will be gone. The six percent summer is almost over.
Over the next few weeks we expect to see the current 3 year rates push back to the 2 year and 18 month ranges. And the 4 month rate offers push up into the 6-9 month space. And while this is happening, the 1 year rate offers will be sinking too.
The rate curve is falling and flattening, a trend we expect to see for a while yet.
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). But in this environment don't get your hopes up for a positive response. Carded rates are likely to now be the 'best rate', except in quite special circumstances.
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 changes. Note it now also includes Rabobank changes.
| for a $25,000 deposit July 31, 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 | 5.75 | 5.75 | 5.70 | 5.60 | 5.35 | 5.10 |
 |
AA- | 4.40 | 5.75 | 5.75 | 5.60 | 5.40 | 5.10 | 5.10 |
 |
AA- | 4.30 | 5.95 | 5.90 | 5.80 | 5.40 | 5.20 | 5.00 |
 |
A | 5.00 | 6.00 | 5.90 | 5.80 | 5.45 | 5.10 | |
 |
AA- | 4.30 | 5.90 +0.10 |
5.80 +0.20 |
5.50 -0.20 |
5.50 | 5.20 | 5.00 |
| Other banks | ||||||||
| Bank of China | A | 5.50 | 6.10 | 6.10 | 6.05 | 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 | 5.85 | 5.80 | 5.80 | 5.60 | 5.35 | 5.15 |
| Heartland Bank | BBB | 5.50 | 6.15 | 6.10 | 6.00 | 5.90 | 5.70 | 5.35 |
| ICBC | A | 5.50 | 6.10 | 6.05 | 6.05 | 5.90 | 5.30 | 5.40 |
| Kookmin Bank | A | 4.40 | 5.60 | 5.70 | 6.00 | 5.00 | 4.60 | |
 |
A | 4.55 -0.50 |
6.00 -0.15 |
6.00 -0.20 |
6.10 -0.20 |
5.70 -0.40 |
5.50 -0.40 |
5.20 -0.40 |
 |
BBB | 4.30 | 5.95 | 5.90 | 5.80 | 5.60 | 5.30 | 5.30 |
 |
A- | 4.25 | 5.80 | 5.80 | 6.00 | 5.60 | 5.40 | 5.20 |
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8 Comments
So the banks are just guessing up, down, down no up. Suppose it’s good at least they have action along with failed forecasts. I’m looking at my council rates bill this week and the actions of the banks and am thinking, no way is inflation really down in NZ, no way can the RBNZ drop the cash rate next month?! Time will tell, might as well have a guess. 🤙🏼
The best rates should be given to loyal customers, but banks and power companies are always giving the best deals to new customers, they forget about the existing customers that have been with them for years. Strange isn't it you have to threaten to leave to get a better deal, its all backwards.
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