Banks are keen to let you know that they are dropping home loan rates, and both ASB and ICBC are the latest to move those.
But they are also shifting down their term deposit rates rather aggressively as well.
And we are starting to see a steepening in the carded rate curves, a bull steepening. (A bull steepening is when the shorter rates fall faster than the longer rates.)
In the shadow of the Easter weekend break, banks are rolling out these changes in the hope fewer savers will notice while they are diverted by their holiday activities, and that when 'normal service' returns after the ANZAC Day holiday these new levels will be just 'historical'. In any event, these are tough moves for savers because inflation is elevated.
Over the past two days we have had rate reductions reported by ANZ, ASB, BNZ, Kiwibank and Westpac, as well as from AMP, Bank of China, the Cooperative Bank, Rabobank, SBS and ICBC.
Non-bank financial institutions haven't moved much yet, and that presents an interesting arbitrage opportunity for savers, especially now their offers are about to become 'guaranteed' by the DCS which kicks in in just over 70 days.
With CPI inflation now reported at 2.5%, this is how it looks after-tax, after-inflation. The example is for a 4.00% six month rate, interest at maturity. The six month term is what most savers choose. It is pretty clear that even this level won't last much longer.
| Advertised rate |
Tax rate |
CPI inflation |
Net real yield |
| % | % | % | % |
| 4.00 | 10.5 | 2.5 | +1.08 |
| 4.00 | 17.5 | 2.5 | +0.80 |
| 4.00 | 30.0 | 2.5 | +0.30 |
| 4.00 | 33.0 | 2.5 | +0.18 |
| 4.00 | 39.0 | 2.5 | - 0.06 |
So yes 'positive' returns are still available after-tax and after-inflation for all savers other than those on the top tax rate. But they are almost irrelevant no matter how you look at them. Enthusiasm for term deposit savings will now undoubtedly wane.
Higher rates are now more common at the longer end of the rate offer cards.
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 month. The pink background colour-code indicates 5%+ rates still available. The yellow colour code for those under 4%. Bolded rates are the "best-bank", the highest carded rate from any bank at this time.
| for a $25,000 deposit April 17, 2025 |
Rating | 3/4 mths |
5 / 6 / 7 mths |
8 - 11 mths |
1 yr | 18mth | 2 yrs | 3 yrs |
| Main banks | ||||||||
| ANZ | AA- | 3.65 | 4.05 | 3.95 | 3.90 | 3.90 | 4.00 | 4.05 |
 |
AA- | 3.70 | 4.00 | 3.95 | 3.90 | 3.95 | 3.90 | 4.05 |
 |
AA- | 3.70 | 4.00 | 3.95 | 4.00 | 4.00 | 4.00 | 4.05 |
 |
A | 3.70 | 4.10 | 4.00 | 4.00 | 4.00 | 4.00 | |
 |
AA- | 3.65 | 4.00 | 4.10 | 3.90 | 3.90 | 4.00 | 4.10 |
| Kiwi Bonds. 'risk-free' | AA+ | 3.50 | 3.50 | 3.50 | ||||
| Rating | 3/4 mths |
5 / 6 / 7 mths |
8 - 11 mths |
1 yr | 18mth | 2 yrs | 3 yrs | |
| Other banks | ||||||||
| Bank of China | A | 4.00 | 4.25 | 4.10 | 4.05 | 4.05 | 4.05 | 4.15 |
| China Constr. Bank | A | 3.85 | 4.25 | 4.20 | 4.20 | 4.20 | 4.20 | 4.20 |
| Co-operative Bank | BBB+ | 3.55 | 4.10 | 4.05 | 4.05 | 4.00 | 4.00 | 4.10 |
| Heartland Bank | BBB | 3.80 | 4.30 | 4.20 | 4.15 | 4.15 | 4.15 | 4.25 |
| ICBC | A | 3.90 | 4.30 | 4.25 | 4.15 | 4.15 | 4.20 | 4.25 |
 |
A | 3.80 | 4.15 | 4.10 | 4.05 | 4.10 | 4.05 | 4.15 |
 |
BBB | 4.00 | 4.20 | 4.30 | 4.20 | 4.20 | 4.20 | 4.20 |
 |
BBB+ | 3.90 | 4.30 | 4.30 | 4.20 | 4.20 | 4.10 | 4.20 |
| 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 | 4.00 | 4.25 | 4.25 | 4.25 | 4.15 | 4.15 | |
| Heretaunga Bldg Society | 3.90 | 4.35 | 4.30 | 4.25 | ||||
| Nelson Building Society | BB+ | 3.40 | 3.85 | 3.85 | 3.80 | 3.80 | 3.70 | 3.70 |
| Police Credit Union | BB+ | 3.90 | 4.20 | 4.25 | 4.15 | 4.10 | 4.05 | |
| UnityMoney | BB | 3.80 | 4.00 | 3.90 | 3.85 | 4.10 | 4.05 | 4.15 |
| Wairarapa Bldg Society | BB+ | 4.00 | 4.30 | 4.30 | 4.30 | 4.20 | 4.20 | |
| Finance companies | ||||||||
| Christian Savings | BB+ | 4.00 | 4.45 | 4.40 | 4.35 | 4.30 | 4.30 | 4.45 |
| Finance Direct | 3.95 | 5.35 | 5.85 | 5.55 | 5.15 | |||
| General Finance | BB | 4.10 | 5.25 | 5.40 | 5.50 | 5.25 | 5.00 | 4.40 |
| Gold Band Finance | BB- | 3.75 | 3.75 | 6.40 | 6.20 | 5.75 | 5.75 | |
| Liberty Financial | BBB | 3.95 | 5.15 | 5.15 | 5.20 | 4.80 | 4.80 | 4.70 |
| Mutual Credit Finance | B+ | 6.00 | 6.00 | 5.95 | 5.75 | |||
| Xceda Finance | B+ | 6.00 | 5.80 | 5.70 | 5.60 | 5.50 | 5.00 |
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38 Comments
But at the same time other investment investment classes are looking like they are on rather shaky ground. A lot of property is negative yielding, bonds look risky if interest rates rise again under Trumps tariffs and was just reading that the S&P 500 now is in death cross territory so could be in for a big correction/fall.
Cash might not be that bad if an option - ie it could be the least worst option in terms of total losses the next 12 months.
How many years have you been saying that for with the opposite result?
How many years have you thought the housing recovery is here but been broken hearted?
I feel it's actually easier to identify poor investments and investment classes than it is to pick the unicorns.
My strategy of late has been to look for sound info sources which signal the lemons and avoid them, and it has been fairly lucrative given the meltdowns in some areas recently
While it's easier to discard losers, "sound" information can be difficult to distinguish. Pick an asset, you can find some sort of resource that can shitcan it.
I agree IO. Just where else do you park your funds? I'm ok to tolerate these low rates as I'm pretty sure future buying opportunities will more than compensate.
Gee a reasoned response compared to Niftys attempt to troll. Thank you Rastus!
Exactly - an exposure gold and silver might good an idea. Otherwise as I say above cash might not be that bad of an option for the next 12 months especially given US sharemarkets at death cross. Rates might go up again with tariffs so bond funds might take another hit.
Have some of that, not enough (and one miner went down the toilet on me) as I had to hold cash for house purchase. Silver still seems to have some catch-up so maybe. Gold will be ok until those under pressure start to liquidate in a big way - as that is what gold is good for. That will be the next opportunity I think.
Was holding off the house purchase for as long as could, but the right house came up so sucked the kumara and got it. Must admit getting the security of a home again is hard to put a price on. The banks will fight hard to keep house prices up, will they succeed I am not so sure.
Exactly - an exposure gold and silver might good an idea.
Hold on Tonto. Even during bull markets, gold had corrections:
Dec 1974 to Aug 1976, drop over 48%.
Mar 2008 to Oct 2008, drop over 33%.
Aug 2020 to Sep 2022, drop over 22%.
Remember, the Smart Gold ETF was only launched in October 2024. Smart (formerly Smartshares), introduced the ETF as part of a strategic alliance with iShares by BlackRock. Aotearoans don't really have exposure to gold.
A blatant and broad brushed generalisation is that gold has done well when shares didn't and vice versa.
What would signify a turn to risk-on?
Things stop moving around enough so as to make potential victors apparent.
What would signify a turn to risk-on?
Expansion of the money supply and suppression of the price of money.
Once QE starts, it doesn’t stop for a long time; it increases as the economy needs more printed money to stand still.
Remember 2008 when the Troubled Asset Relief Program (TARP) bailout was announced. That failed to quell the destruction the bankruptcy of Lehman Brothers brought upon the markets, and both stocks and gold fell. When TARP proved insufficient to stop the collapse of the Western financial system, Bernanke announced Large Scale Asset Purchases, now called QE1. Gold started rallying, but stocks continued to fall. Stocks didn’t bottom until shortly after the Fed began printing money in March 2009. By early 2010, gold was up 30%, and stocks were up 1% post-Lehman’s failure.
And the ol' rat poison didn’t exist in 2008. But now it does.
But simultaneously Trump is trying to cut US deficit from 6% to 3% of GDP. So not sure how stimulating QE will be if you create funny money but don’t intens on deploying it into the economy via increased government spending as you are actively trying to cut government spending. Ie Fed buy Treasury bonds but Trump administration and DOGE are trying to reduce spending/debt which is what these bonds are the funds for. It doesn’t add up. Do you think Trump and DOGE do a U-turn and say actually we’re back to QE so we are going to reduce rates, increase debt and increasing spending more to stimulate the economy? (and disregard all the cuts we’ve made to government employees and programs these past few months? They would look like fools).
I'm not talking about public spending. Bessent needs buyers for the gargantuan amount of debt that must be rolled over and for the persistent federal deficits out into the future. His plan is to lower the deficit to 3% from roughly 7% by 2028.
Capital gains taxes from a rising stock market are the marginal revenue driver for the government. When rich folks aren’t making money punting on stocks, the deficit grows. Trump didn’t campaign on a platform to cease military spending or cut entitlement benefits like healthcare and social security. He campaigned on a platform of growth and elimination of fraudulent spending. Therefore, he needs capital gains tax revenue, even though it's rich people who own all the stocks, and on average, they didn’t vote for him in 2024.
Back to QE. The New Deal was the woke, inclusivity and DEI bugaboo 70s. Rich people are always ok with the central bank printing money to bailout their financial assets, but are never ok when poor people get a piece of the pie. That’s not to say government handouts actually elevate the masses out of poverty, but they do make people feel good and less likely to cause social unrest.
"where else do you park your funds?"
Gold
Jumping on the bandwagon Dr Y. Would love to be a fly on the wall at one of the property seminars and listen to what Ashley Church has to say. Could imagine you leaning forward with serious concentration on the subject matter.
Dammit this trading thing is harder then it looks.
Which is why Ash Church's snake oil is so appealing, just buy property and never sell no matter what happens as it always goes up.
Low saving rates are certainly tolerable for the time being, while most other investments (many stocks, bonds and most property) are still stretched for valuations and risks, to still much further downside is very likely.
So bank deposits, metals, cash funds, are the safest and thickest hulled boats, in waters bedevilled with hidden reefs.
What should grind most reasonable peoples gears, is the constant and unrelenting BS being peddled by the general FIRE industry types......especially the bank economists and property pumpers. It's like their life story and greedy purpose of heaping masses of new and now "total life debt burden" heaping onto poor FHB sops, is at stake. Their wanton greed is all consuming of them.
Just now on Onefoop pages, we have Eddy Knighty say "dont wait till the bottom" "buynow and buy often" on property and ole Tones Comb, saying "Spring will have zing" Get in.
The message they try to evangelise, is best to buy now, I NEED MY CUT!!! AND MY OWN SOGGY Housing INVESTMENTS, TO GO NORTH BIGTIME!!!
https://www.oneroof.co.nz/news/why-waiting-for-the-bottom-of-the-market…
This market has seen sooooo many more bottoms, than a worn out colon camera.
Just wait till the A Churchless one, get his new BS storyline going, to counter this current and just midway unfolding - biggest housing crash in NZ history.
They are giving bad, bad advice imho, where is the FMA action? - on these nefarious actors of property investment messaging, Pied Pipers.
Comments that have nothing to do with the article should be deleted. These DGM's always bring it back to property, especially when their beloved TDs are being exposed as rubbish investments.
Sorry sad Nifter, my comments we all about the great, secure options in the bank deposit market and holding the retirement cash funds (in bank deposits getting 4 to 6%- very nice:) ....... Complete and total relevancy here bud!
Comparing investments and the real realised gains/losses and future losses of capital (property wise especially) are equally relevant for the esteemed and growing Interest readership peeps.
You really do look like a sour lemon sucka here Nifter.......you cannot handle the truth of property bombing bad for you since 2021 and with future capital losses just mounting and further, as we go into 2026......enjoy the folly of your current property hoarding track/investments.
-Or go back to your Property Ponzi loving pages on the OneFoop website, if you cannot handle the jandal, the truth and robust debate here.
Pandering to mum and dad at INTEREST, to silence those who bring the relevant messages you disagree with, shows weakness in your argument, resolve and investment track.
The investment world changed its paradigm in 2021 (higher inflation and cost of debt becoming entrenched) and many still have not their minds around it, obviously!
Exactly
But that is the crux of the issue that you don’t appear to wish to acknowledge, term deposits haven’t been a rubbish investment these last few years. Eg buy a rental property 3 years ago, lose 15-20%. Hold TDs then you haven’t lost any capital but instead have increased your capital. Bond funds got hammered as interest rates went up so the only assets that TDs wouldn’t have outperformed these past few years are the sharemarket and precious metals.
Given you say with 100% confidence that TDs are a terrible investment, I take it that you have been actively encouraging people to avoid buying houses the last few years (given the loses incurred by those who purchased at the peak) as well but instead investing in the sharemarket and buying gold - as that is where the big returns have been made. But I don’t recall you making any such statements.
Perhaps Nifty is saying that term deposits are returning to their traditional status of rubbish investments. It's been rare historically for TD interest rates to realistically beat inflation. Most investors would not regard it as investing.
It was also rare for about 100 years prior to 1990 ish for house prices to rise much above inflation (ie more of less flat in inflation adjusted terms) - but now everyone thinks it’s a great investment because for a few decades it has provided unsustainable returns much above inflation and every man and women who gambles with debt/leverage and made good returns calls themselves a ‘savvy investor’. Perhaps housing is also returning to being a lousy investment that it was prior to 1990 ish? Although that wouldn’t fit your and Niftys narrative/agenda who like to promote housing as the best and only way to invest.
Widespread reporting of an over-supply of townhouses is likely to also be having an impact on prices and supply. In fact, according to my sources, some developers who have held completed stock back from the market are now being forced by their financiers to bring those units forward for sale.
Will the housing market gain extra strength as we proceed through 2025? Probably, but not until spring. The tariff war initiated by the United States has shocked global sentiment and made people pull back anew on their spending plans here and overseas. Investors have lost money in their managed funds accounts, meaning house deposits have shrunk for some people, and costs associated with owning property keep climbing.
It may take a long time before the tariff war stabilises, and even longer to figure out the impact on global growth, supply chains, and inflation. Until then, buyers are likely to continue to feel no great need to rush and make a purchase, and vendors will have to seriously consider discounting their asking price if they want to get a sale across the line.
No need to attack me. I'm just saying that cash has never been considered a great investment and really it is rather risky. A bit like that parable of the talents.
This is why they're mad and bizzarly need to keep discussing propery like it's the only other investment option...
Example:
Over the past five years in New Zealand, term deposits have delivered an average pre-tax return of approximately 3.25% per annum. After accounting for a 33% tax rate, the net return drops to around 2.18% annually. However, during the same period, inflation averaged about 4.15% per year. This means the real, inflation-adjusted after-tax return on term deposits was approximately -1.97 per annum, indicating that the purchasing power of money held in term deposits declined each year over this period.
Alternative investment example - where $ could of been made:
Over the past five years (2020–2024), the S&P 500 delivered an average annual return of approximately 14.32%, including dividends. After accounting for a 33% tax rate, the net return is around 9.59% per annum. Adjusting for New Zealand's average inflation rate of approximately 4.15% during the same period, the real, inflation-adjusted after-tax return stands at about 5.44% per annum.
Summary:
This indicates that, even after considering taxes and local inflation, the S&P 500 significantly outperformed term deposits in terms of preserving and growing purchasing power for New Zealand investors.
14.5% . Why, that could go on forever.
Or there could be a different indication in your last paragraph.
well I retired about a year ago -- cashed up my Auckland place in March ( sucked up the price drop) moved to Waverly as still wanted a base
I have enough cash to get me through from 56 to 63 and need to generate two years worth of living costs from about 350K which will drop as I draw down on it - ( no mortgage though) otherwise I go back to work.
Dont need to worry about 65+ as ill have full pension and 220K in my KS today - and not likely to live that long due to Heart conditions -
So the TD is concerning but hard to see at the moment what better options there are - as people say - if risk is off gold will drop - if the markets go south .... and property is also por returns and would soak up too much of my small cash - open to suggestions and doing own research but its looking pretty bleak for the next year or so
ps - I love being retired and finally having a life so that will only change if it absolutely has too!
Great Move KP!
I could very well do similar and would love to spend more time with older relatives, whose bones and health gets more creaky, as time goes on.
Im in cash, metal miners, own house, and some other selected stocks.
I know of many Landlords (PokedPonzi) trying to cashout now/soon, many stocks in the US are still hellishly overvalued. We all know what a mad rush at the narrow exit door looks like - 1929 gives us all a lesson, as to what may unfold....
Risk to the downside and capital losses is very likely on many fronts ......
Yes why I pointed out in the initial post that the S&P 500 is entering death cross so there is a risk of a market crash/correction.
You would then say ‘invest in bond funds as interest rates will drop if the sharemarket crashes’ but Trump’s tariffs and some inflation indicators are saying that interest rates may actually start rising again - which could indicate neither the sharemarket nor bond funds are good places to park money right now. Further a lot of property is negative yield and there are rising quantities of stock to sell coming into winter, so then you d say there is high risk of further drops in property prices. This leaves you with cash/TDs and precious metals as the other alternatives…
Balanced portfolio there Kenny. But given your position you don’t want to take on much risk so your sharemarket exposure should be relatively small.
It has been very surprising to me to find out how many people at or near retirement are still in growth funds (eg KiwiSaver or other manager funds) with very high exposures to sharemarkets. Sure they have done very well by this post GFC but you have to ask yourself ‘could I emotionally handle a 50% drop in the sharemarket (and thus a large portion of my KiwiSaver/managed fund) if this were to happen the next few years?’ Many are completely unaware of just how high the % of their retirement savings are invested in the sharemarket.
kennypaton6743,
No magic bullet, but you could look at the Local Authority Funding Agency the 2033 Bond was offering 4.85% a few days ago and if as expected TD rates fall further, that would increasingly attractive.
A TD isn’t an investment more so a portfolio allocation. Every fund will hold a portion of cash / short term money and weight it according to the central macro view. Retail investors easiest access to short term interest rates is TD’s however they are far from perfect as you can’t effectively sell them down if you want to like a T Bill or short bond etc. you can cash them in but the bank will make sure they get the gain on that if there is one.
The US Treasury must roll over 33 per cent of its $36 trillion federal debt in the next 12 months.
no pressure....
David,
"short term TD's" -from a journalist, that's inexcusable. Plurals DON'T have apostrophes.
Have a cry sunshine 😢
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