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New Zealand's biggest bank pulls back from some market leading term deposit rates but raises its 18 month to a market high

New Zealand's biggest bank pulls back from some market leading term deposit rates but raises its 18 month to a market high

This morning, ANZ has raised its 18 month term deposit rate to a market-leading 5.00% pa.

At the same time it has given up some ground on term deposit rate offers from 2 to five years, falling back into the pack.

In addition, it has reduced its Serious Saver potential rate to 4.40%, down -10 bps from 4.50%.

The reduction in this bonus saver rate comes after BNZ made a similar reduction in the middle of last month

Given the recent widespread reductions to carded mortgage rates, it is actually impressive how well term deposit rates have held their ground.

New Zealand savers should consider themselves fortunate compared with savers in Europe, North America or Japan where real rates are either minuscule or negative.

Given our CPI inflation is running at just 1.0% pa (in the September quarter), a 5% offer gives a real return of +4% which is historically high. After tax at the top marginal rate, the real return is 2.35% which is still much better than is available in other countries.

In Australia for example, ANZ offers an 18 month term deposit at 3.2%. The comparable tax rate is 32.5%, while their inflation is running at +2.3% pa.. So savers in Australia are facing negative real returns of -0.15% pa.

WDKHLWA  (for now).

New Zealand households grew their bank balances at the rate of almost 10% per year in September, a growth rate that has started rising again recently.

Use our deposit calculator to figure exactly how much benefit each option is worth; you can assess the value of more or less frequent interest payment terms, and the PIE products, comparing two situations side by side.

All term deposit rates for all institutions for terms less than one year are here, and for terms one-to-five years are here.

Term PIE rates are here.

This positions the latest offers as follows:

for a $20,000 deposit 6 mths 1 yr 18 mths 2 yrs 3 yrs 5 yrs
             
4.10% 4.50% 5.00% 4.75% 5.00% 5.50%
ASB 4.15% 4.50% 4.50% 4.75% 5.00% 5.50%
4.30% 4.50% 4.60% 4.75% 5.00% 5.50%
Kiwibank 4.50% 4.60%   4.75% 5.00% 5.75%
Westpac 4.10% 4.50% 4.60% 4.75% 5.00% 5.50%
             
Co-op Bank 4.50% 4.60% 4.70% 4.85% 5.10%  
Heartland Bank 4.40% 4.50% 4.65% 4.75% 5.15% 5.60%
HSBC Premier 4.00% 4.20% 4.40% 4.65% 4.90% 5.25%
RaboDirect 4.50% 4.65% 4.75% 5.00% 5.25% 5.65%
SBS Bank 4.25% 4.60% 4.65% 4.85% 5.10%  
4.10% 4.50% 4.60% 4.80% 5.00% 5.75%

Term deposit rates

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1 Comments

The problem with them changing their serious saver rate downwards near the beginning of the month, is that under their terms, savers are locked into keeping their money in that account fot the rest of the month at a lower rate than they can get at other banks, otherwise their forfeit 3-5 days of interest. If they are changing their rates, to be fair, it shoud be at the end of the month.

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