A main bank moves the 6% term deposit rate offer to a six month term, and raises its three year offer to a market-leading 6.10%

ASB is pushing the boat out further in the term deposit market, now offering the best rates to savers of any main bank.

It has raised its offer rates by as much as 30 basis points across a range of key terms.

Although Rabobank remains the challenger bank with the best rates on offer, these new ASB rates narrow the difference sharply.

And ASB has put quite some space between it and the other main banks.

For example, it has become the first main bank to offer 6% for a six month term. That is +10 bps better than Kiwibank, and +20 bps better than Westpac. The other two fall in between.

Only Rabobank's 6.05% is better.

For a nine month term, ASB is now at 6.10% which bests Westpac's recent offer.

For a one year TD, ASB is also at 6.10%, again the best of any main bank by topping Kiwibank's 6.05%.

One objective of this move might be to shore up its unusual mortgage position. It is not rate-competitive on mortgages, deciding to prioritise its margins over sales volume. But by raising TD rates, perhaps it is trying to pressure other banks to raise home loan rates to their level by setting a higher cost of funding from retail ('non-market') sources? It will be hard to resist because savers have shown a ready willingness to chase higher term deposit rates by moving aggressively back to term deposit investments.

Whether this competitive move makes sense for ASB will depend on the specific makeup of their funding portfolio and no-one but them knows that.

Savers and borrowers alike should remember you can negotiate with any bank over their carded rate offers. You won't get a better rate if you don't ask. Whether a better rate is offered to you is up to the bank, and their perceptions of you, your financial situation and how important they feel it is to gain or retain your business. Many bank officers have some minor discretion on rates.

One risk savers should watch is the cost of wholesale money and you can do that by looking at swap rates. You can do that here. Wholesale swap rates jumped recently, and we detailed those shifts here. But post the Gaza explosion, there has been a settling back in these wholesale rates.

An easy way to work out how much extra you can earn is to use our full function deposit calculator. We have included it at the foot of this article. That will not only give you an after-tax result, you can tweak it for the added benefits of Term PIEs as well. It is better you have that extra interest than the bank, especially if you are in the 39% tax bracket - PIEs are taxed at 28% flat.

The latest headline rate offers are in this table after the recent increases.

for a $25,000 deposit October 12, 2023	Rating	3/4 mths	5 / 6 / 7 mths	8 - 11 mths	1 yr	18mth	2 yrs	3 yrs
Main banks
ANZ	AA-	4.30	5.85	5.85	6.00	6.00	5.70	5.25
	AA-	4.20	6.00 +0.15	6.10 +0.25	6.10 +0.10	6.00	6.00 +0.10	6.10 +0.30
	AA-	4.30	5.85	5.85	6.00	5.90	5.70	5.25
	A	4.40	5.90	5.90	6.05		5.70	5.20
	AA-	4.30	5.80	6.00	5.90	5.80	6.00	5.50
Other banks
Bank of China	A	5.00	5.90	6.00	6.10	6.10	6.00	5.60
China Constr. Bank	A	5.00	5.90	6.00	6.10	6.00	5.80	5.50
Co-operative Bank	BBB	4.20	5.95 +0.10	5.90	6.10 +0.10	6.00	5.90	5.80 +0.20
Heartland Bank	BBB	5.50	5.90	6.00	6.10	5.90	5.90	5.85
ICBC	A	4.80	5.90	6.00	6.05	5.85	5.55	5.40
Kookmin Bank	A	4.40	5.60	5.70	6.00		5.20	5.20
	A	5.05	6.05	6.15	6.30	6.10	6.10	5.90
	BBB	4.20	5.85	5.70	6.00	5.90	5.90	5.90
	A-	4.25	5.75	5.80	6.00	6.00	5.90	5.80