The opportunities for yield in term deposits just got worse, and may get worser* before too long.
Westpac has pushed through substantial cuts, following ANZ, TSB and Heartland Bank. They all followed BNZ and ASB. The other big banks are expected to follow soon.
Some of the cuts are substantial, exceeding -30 basis points.
The only mitigating aspect is that most of these reductions are coming at the longer end of the rate card; the shorter end, where most savers are, have got off relatively lightly so far.
The result of all this is a flattening of the term deposit rate curve.
However, there seem to be a few opportunities still available. But you will have to be very quick.
For example, ASB and Kiwibank's 3.40% for six months seems tasty (relatively) in the current environment.
RaboDirect's two and three year rates do too at 3.55% and 3.70% respectively.
But it's hard to see any of these four rates lasting very much longer
These rates have a big impact on banks' cost of funds, more so than wholesale money rates. So don't expect banks to be soft touches when you try to negotiate some sort of premium. Even a deposit of $100,000 may not attract a premium these days. Switching is probably your best bet at this time if you need a better yield.
The updated rates in the table below are the highest offered by each institution for the terms listed. You however will need to check how often interest is credited or paid. That important factor is not filtered in the table and rates with various interest payment/credit arrangements are mixed here. However, our full tables do disclose the offer basis.
Our unique term deposit calculator can help quantify what each offer will net you.
All carded, or advertised, term deposit rates for all financial institutions for terms of less than one year are here, and for terms of one-to-five years are here.
The latest headline rate offers are in this table.
| for a $25,000 deposit | Rating | 3/4 mths | 5 / 6 / 7 mths |
8 / 11 mths |
1 yr | 18mths | 2 yrs | 3 yrs |
| Main banks | ||||||||
| ANZ | AA- | 3.00 | 3.25 | 3.35
 |
3.25
|
3.20
|
3.20
|
3.25
|
 |
AA- | 2.90 | 3.40 | 3.25 | 3.25 | 3.20 | 3.20 | 3.25 |
 |
AA- | 2.90 | 3.25 | 3.35 | 3.25
|
3.20
|
3.20
|
3.25
|
| Kiwibank | A | 2.90
|
3.40 | 3.30
|
3.40 | 3.45 | 3.50 | |
 |
AA- | 2.95 | 3.25 | 3.40 | 3.40 | 3.40 | 3.45 | 3.50 |
| Other banks | ||||||||
 |
BBB | 2.90 | 3.20 | 3.25 | 3.30 | 3.25 | 3.30 | 3.40 |
 |
BBB | 3.15
|
3.35 | 3.45
|
3.45
|
3.50
|
3.50
|
3.55
|
| HSBC Premier | AA- | 2.60 | 2.90 | 2.90 | 2.90 | 2.90 | 3.00 | |
| ICBC | A | 3.05
|
3.35
|
3.35
|
3.45
|
3.45
|
3.50
|
3.55
|
 |
A | 2.80 | 3.30 | 3.30 | 3.35 | 3.55 | 3.55 | 3.70 |
 |
BBB | 2.90 | 3.25 | 3.30 | 3.40 | 3.40 | 3.45 | 3.50 |
 |
A- | 2.85
|
3.10
|
3.15
|
3.15
|
3.15
|
3.15
|
3.25
|
Term deposit rates
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Update: An earlier version incorrectly stated the TSB 3 year rate was 3.15%. It has now been corrected to 3.25%.
* Yeah, yeah, I know; it's not a real word. But what would you use after you have gone from bad to worse? What 's next?
22 Comments
You mean lazy investors who have already benefited massively from the system over decades. Who now expect continued free lunches at the gravy trough at the expense of FHB and young families with mortgages via higher interest rates. Their conflicted morals are interesting to watch.
Merrydaze. The investors you malign are neither 'lazy' nor have 'conflicted morals'. Many landlords put a lot of effort into their properties and carry significant risk; I'm not one but have mates and family who are and I watch them sweat at times when things go pear shaped. Lazy is putting all your cash in the bank and snivelling when interest rates are low and inflation erodes the capital value (except older investors where a strong weighting to TDs is often sensible). Housing investors are simply responding logically to market forces, taxation treatment, and government policy when they choose this investment class over others; housing investment can just as validly be argued to be a noble endeavour.
Middleman. I was replying in support of TTPs dry sense of humour baiting RP, ironically it earned him a lot of thumbs up lol. That was exactly the point I was making I was referring to term deposits, totally agree with your investor sentiments. The snivelling TDs as you call them want more free money via higher interest rates, higher interest rates are at the expense of young families and FHB who once again carry the can.
KiwiSaver doesn't pay you monthly interest and you don't have control over your money. I wouldn't consider KiwiSaver a "Safe" option for large amounts of money. Not an "Investment" option for me, wouldn't even put money into it while I was working let alone a lifetimes savings that could just disappear overnight. The secret to money and happiness is knowing when you have enough of it and not to get greedy.
Just put a TD down at ASB for their 6 month rate of 3.4% which is as good as it gets at present, especially as the interest is paid monthly. Can only hope it holds for another month when the next TD is due to roll over. Tough times ahead I suspect will put the squeeze on.
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