Both ASB and Westpac follow up their home loan rate cuts with reduced rates for term deposit savers. Now three institutions (including these two) no longer offer any 5% rates

Both Westpac and ASB cut term deposit rate offers on Friday. 

And both, along with NBDT NBS, are now the only institutions not to offer any 5% or greater rate options.

The cuts by ASB were especially notable because they were outsized compared with recent moves.

Westpac only trimmed its 5, 6 and 9 month rates (be between -15 and -20 bps), but ASB went further taking between -10 and -25 bps off all rate offers between 5 months and three years. They also cut their 1 month TD rate by -25 bps.

That left ASB with the lowest overall rate card for savers.

In fact it is now offering only a +35 bps premium to the risk-free Kiwi Bond rate for a six month term, only +30 bps for a one year term. Notably, Treasury hasn't moved its Kiwi Bond rates since November 5, 2024. At that time the yield on a one year NZGB bond was 3.83%. Today it is 3.70%, so they probably are not under much market pressure to adjust them lower. The upshot is that ASB is taking a chance that its customer savers will grin/clench and bear it.

ASB next release their half year results in late February and along with the RBNZ Dashboard release, that will give us a look at how well their loan book has grown. Perhaps their sharp home loan rate cuts on Friday signal that loan growth has been weak and if that were to be the case, then they are prepared to risk deposit retention because the loan demand isn't there. We don't know; that is only speculation about why they have been aggressive with these cuts.

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.

for a $25,000 deposit January 17, 2025	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	4.85	4.70	4.55	4.30	4.20	4.30
	AA-	4.20	5.00	4.75	4.70	4.55	4.35	4.40
	A	4.40	5.10	4.90	4.80		4.50	4.40
	AA-	4.25	4.90	4.80	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	4.40	5.00	4.95	4.85	4.65	4.50	4.40
Co-operative Bank	BBB+	4.15	5.05	4.75	4.80	4.60	4.50	4.40
Heartland Bank	BBB	4.65	5.05	5.00	4.75	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	4.80	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
Non-Bank Deposit Takers	Rating	3/4 mths	5 / 6 / 7 mths	8 - 11 mths	1 yr	18mth	2 yrs	3 yrs
Community institutions
First Credit Union	BB	4.25	5.25	5.00	4.90	4.60	4.50
Heretaunga Bldg Society		4.30	5.15		4.85		4.50
Nelson Building Society	BB+	4.00	4.70	4.45	4.55		4.15	4.15
Police Credit Union	BB+	4.20	5.05	4.90	4.75	4.50	4.30
UnityMoney	BB	4.25	5.00	4.80	4.55	4.45	4.25	4.25
Wairarapa Bldg Society	BB+	4.05	4.50	4.90	4.75	4.50	4.30
Finance companies
Christian Savings	BB+	4.40	5.15	5.00	4.85	4.65	4.45	4.45
Finance Direct			3.95		6.50	5.90	6.00	6.10
General Finance	BB	4.55	6.05	6.15	6.25	6.00	5.75	5.50
Gold Band Finance	BB-		3.75	3.75	6.40	6.20	5.75	5.75
Liberty Financial	BBB	4.25	5.85	5.65	5.50	5.00	5.00	4.90
Xceda Finance	B+		6.50	6.40	6.40	6.00	5.80	5.50