BNZ has trimmed a small set of term deposit rates, following recent reductions by both Kiwibank and Rabobank.
And next week we are almost certain there will be more term deposit rate cuts.
Apart from two Chinese owned banks, the highest rate offer is now 5.15% from the Co-operative Bank or Heartland Bank for a six month term. That is a long way down from where we started the year where 6% rates were almost universal.
But rate cuts for savers have come regularly over the past three months, mostly in small amounts so as not to attract too much attention.
If you haven't locked in a 5% rate by the middle of next week, you may be too late. When we come back from our holiday break, it would be no surprise to find no term deposit rate offers of 5% or more. None.
Loan demand isn't improving and that undermines how much banks want to compete for savers.
We had recently noted some respected analysts were saying short term wholesale swap rates are unlikely to move down much from where they are now. But in fact over the past week short swap rates have continued to move lower, so even those who follow these things closely may have got the trend estimate wrong.
When we return from holidays, there will be an expected Reserve Bank Official Cash Rate cut in February, currently priced by financial markets at 50 basis points. So that probably means wholesale pressures for lower rates will persist.
With international long rates firming, and local short rates having more downside, the rate curve inversion could vanish relatively quickly. It would not be a surprise to come back after the holiday period to find it gone.
Our table below highlights rate offers of 5% or better. In a falling market, it might seem attractive to lock in rates for a bit longer.
Wholesale rates are all trending lower, especially for short-terms, as you can see here and here.
When you invest, always check how interest is compounded. Depending on how much you are committing, compounding more often is materially better. But some banks advertise their "interest at maturity" rates different to their compounding rates, which for some can be set a little lower. Both Kiwibank and Rabobank do this, although most other main banks don't.
Use the calculator at the foot of this article to see the differences.
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 over the past week. The background colour-code indicates 5%+ rates still available. (Updated with BNZ reductions.)
| for a $25,000 deposit December 12, 2024 |
Rating | 3/4 mths |
5 / 6 / 7 mths |
8 - 11 mths |
1 yr | 18mth | 2 yrs | 3 yrs |
| Main banks | ||||||||
| ANZ | AA- | 4.25 | 5.05 | 4.90 | 4.75 | 4.55 | 4.45 | 4.35 |
 |
AA- | 4.25 | 5.05 | 4.90 | 4.75 | 4.55 | 4.35 | 4.35 |
 |
AA- | 4.20 | 5.10 | 4.90 | 4.75 | 4.55 | 4.35 | 4.40 |
 |
A | 4.40 | 5.10 | 4.90 | 4.80 | 4.50 | 4.40 | |
 |
AA- | 4.25 | 5.05 | 5.00 | 4.75 | 4.60 | 4.40 | 4.40 |
| Kiwi Bonds. 'risk-free' | AA+ | 4.50 | 4.25 | 3.75 | ||||
|
|
||||||||
| Rating | 3/4 mths |
5 / 6 / 7 mths |
8 - 11 mths |
1 yr | 18mth | 2 yrs | 3 yrs | |
| Other banks | ||||||||
| Bank of China | A | 4.60 | 5.35 | 5.20 | 5.00 | 4.75 | 4.55 | 4.45 |
| China Constr. Bank | A | 4.45 | 4.95 | 4.85 | 4.80 | 4.70 | 4.45 | 4.40 |
| Co-operative Bank | BBB | 4.15 | 5.15 | 4.90 | 4.80 | 4.60 | 4.50 | 4.40 |
| Heartland Bank | BBB | 4.65 | 5.15 | 5.00 | 4.85 | 4.65 | 4.50 | 4.40 |
| ICBC | A | 4.65 | 5.35 | 5.05 | 4.95 | 4.75 | 4.55 | 4.40 |
 |
A | 4.35 | 5.10 | 4.95 | 4.90 | 4.65 | 4.40 | 4.40 |
 |
BBB | 4.25 | 5.10 | 5.00 | 4.80 | 4.50 | 4.50 | 4.50 |
 |
BBB+ | 4.25 | 5.05 | 4.90 | 4.75 | 4.55 | 4.40 | 4.40 |
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43 Comments
Still got 5.25% for 6 months. Honestly with the state of the world as it is, all bets are off as to where we will be even in 6 months time. Don't really need to eat into the reinvestment amount much on rollover so can handle rates in the 4's until the super kicks in.
Oh-WOW, you are so obsessed with me and my investment choices - it's just creepy. I wasted 5 minutes finding these. There are more too. Most of your posts offer nothing of value - nothing at all.
by Iceman | 8th Aug 24, 2:50pm
Retired Poopy - you’re going to be loving your 3% TD rates less tax on interest soon.
by Iceman | 8th Aug 24, 3:42pm
Trigger happy 50 plus year old who “invests” in TDs
by Iceman | 27th Sep 24, 2:19pm
I sure am, but just need to expose those with Term deposits as investments
by Iceman | 27th Sep 24, 12:41pm
He is a renter in his 50s with TDs as “investments”
by Iceman | 2nd Dec 24, 10:00am
Retired Poppy will be crying about his TDs
Ignore him RP. I’m heavy into TDs, would like better returns but I’m frugal and sleep easy.
Irony is Iceman wasn’t running 400m repeats today (on a work day), fishing last Thursday or watching Trump run home from New York.
Enjoy retirement. Work sucked (but some do enjoy it).
‘Aim higher, I wouldn't get out of bed for less than 50% return pa on my money’
Gee you must be the worlds best ever investor! Buffet or Templeton or Druckenmiller should walk in shame in comparison to you!
And if you actually consistently achieve 50% pa I don’t know why you’d even ever bother commenting on this site as in theory you would or should be the worlds richest man.
If you're a passive investor, just wanting to park your money somewhere in the hope it will increase in value, 10% is a good return. If you buy investments you have control over, and you're prepared to do some work to create value in your investments, 50% is not that high.
Yes, please see my actual example in the thread below at 5:35.
The concept is have an area of expertise, search for businesses struggling in that area, make offers to buy them cheap and leave finance in, many will refuse, 1 or 2 will accept the offer, turn the business around and sell it for a substantially higher price or keep it as a cash generating company.
Perhaps, although during periods of history it is a good investment.
Take a look at the real return on the 1 year yield in the US:
https://fred.stlouisfed.org/series/REAINTRATREARAT1YE
Recent decades it has been poor but this has perhaps resulted in an over investment in other areas resulting in very high prices relative to earnings in those other assets (eg shares/property). Buying those assets now may result in very poor returns relative to inflation. Things can be cyclical over a long term (decades) for the economy to keep equilibrium.
The Shiller CAPE is now extremely high which over the past 100+ years has resulted in poor returns over the subsequent years or decade + for shares.
That's because you added the word "guaranteed". You see IO, when you invest your money, there is no guarantee of future returns.
But I can see your mindset, you are looking for investments that are all ready for you to just put your money in, without you having to do any work. These will indeed not yield you 50% pa. First thing to do is to open your mind to buy an investment that you can control and then create value in! Next step is to actually do some work to create value, which is where most give up.
Yes I should buy some motels and rentals and reap the rewards of the accommodation supplement and housing the homeless and living off the back of other income earning tax payers. Then come on here and celebrate my millions of dollars of untaxed capital gains and tell other people they need to be more productive.
Your sarcasm and attempt at motral superiority won't help you make money IO.
I'll give you a real world example. Say you have good experience at successfully running a profitable Motel. You can then search out a poorly managed Motel making no profit with the owner just wanting out of his misery. Therefore you can buy the lease cheaply for say $300k with the vendor leaving 50% finance, so you use $150k of your own money. As the new owner you advertise the Motel much better, get great staff and turn it into a profit making business in 2 years. The lease is now worth $500k (a very reasonable price), so you have made $200k in two years or a 133% return on your $150k in two years.
Taadaa, that's a very realistic example, but yes, you have to be willing to do some work, which many are not prepared to do.
'But I can see your mindset, you are looking for investments that are all ready for you to just put your money in'
I think for most people the idea of 'investing' means "passive" investing. Otherwise investing just turns into another job. Most people already have jobs they are busy with and are looking to "invest their savings" into passive investments of some kind.
It's theoretical fluff.
So are you trying to say that you invest in the sharemarket because of the companies creating goods? No you don't, if you're honest, you have to admit that you invest in the sharemarket because you want to make a buck, preferably quickly and without having to do any work. That's the truth !
Some of us are on the 17.5% tax bracket. I don't care about inflation as long as I'm not cutting into the principle significantly. Its going to still be a significant mount when I hit 65 so it beats working full time. Sometimes its not all about the money, but most people cannot seem to find the balance.
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