Now things are getting really interesting!
SBS Bank has launched a limited-time offer of 6.70% for a one year term deposit.
It is a 'special offer' only valid until November 7. A minimum deposit of only $1000 is required for these "term share investments". Interest can be paid monthly, quarterly or at maturity.
This SBS Bank offer effectively spreads the high rates around more banks.
In fact, across all banks, you can get a term deposit offer of 6.10% or more for any term of six months to three years.
Bank of China offers 6.10% for a six month term.
For nine months you can get 6.15% from Bank of China, or Rabobank.
For one year every bank bar ANZ, Kookmin Bank, Westpac and TSB offer 6.10% or more, with today's SBS Bank offer the standout at 6.70%. Westpac is the only one lower than 6%.
Update: Westpac has also updated rates today now, raising them to levels consistent with their main rivals, although their new 18 month rate is now the best of the main banks.
Update II: Now ANZ has also raised its term deposit rate offers (as well as raising its carded home loan rates) "to reflect the recent increases in wholesale swap rates" they say. However, none of ANZ's updated term deposit rates are at market-leading levels.
For 18 months Rabobank and Bank of China offer 6.10%. Update: So does Westpac now.
For longer terms. you can get 6.10% from Rabobank for two years, and the same rate from ASB for three years.
But nothing currently comes close to SBS Bank's limited-time 6.70% offer for a one year term deposit.
What makes the 6.7% level interesting is the after-tax equivalents. They are now almost equivalent to Consumer Price Index inflation for most taxpayers on a 17.5% income tax rate.
| Income tax rate ... | 17.5% | 30% | 33% | 39% |
| for a 6.70% before tax rate | ||||
| After tax | 5.53% | 4.69% | 4.49% | 4.09% |
| Q3-2023 CPI rate | 5.60% | 5.60% | 5.60% | 5.60% |
| After tax & after inflation | -0.07% | -0.91% | -1.11% | -1.51% |
This is the closest any saver has come to covering inflation in more than 15 years.
At the same time, SBS Bank has raised its reverse mortgage floating rate to 9.95%, a 20 basis points rise. That compares with Heartland Bank's 9.98% rate for its reverse mortgage clients.
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.
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 24, 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 | 6.00 +0.15 |
6.00 +0.15 |
6.10 +0.10 |
6.00 | 6.00 +0.30 |
5.50 +0.25 |
 |
AA- | 4.20 | 6.00 | 6.10 | 6.10 | 6.00 | 6.00 | 6.10 |
 |
AA- | 4.30 | 6.00 | 6.00 | 6.10 | 6.00 | 6.00 | 5.45 |
 |
A | 4.40 | 6.05 | 6.10 | 6.15 | 5.80 | 5.50 | |
 |
AA- | 4.30 | 5.95 +0.15 |
6.00 | 6.00 +0.10 |
6.10 +0.30 |
5.90 -0.10 |
5.50 |
| Other banks | ||||||||
| Bank of China | A | 5.10 | 6.10 | 6.15 | 6.25 | 6.10 | 6.05 | 5.85 |
| 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 | 5.90 | 6.10 | 6.00 | 5.90 | 5.80 |
| Heartland Bank | BBB | 5.50 | 5.90 | 6.00 | 6.10 | 5.90 | 5.90 | 5.85 |
| ICBC | A | 5.00 | 6.00 | 6.05 | 6.15 | 6.05 | 6.00 | 5.55 |
| 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 | 6.70 +0.70 |
5.90 | 5.90 | 5.90 |
 |
A- | 4.25 | 5.75 | 5.80 | 6.00 | 6.00 | 5.90 | 5.80 |
Term deposit rates
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34 Comments
In time - No. My understanding is the incoming Deposit Insurance Scheme will cover Building Societies as well.
https://www.beehive.govt.nz/release/deposit-compensation-scheme-becomes….
Cannot put numbers on it, I'm not greedy so no need to stray outside of the big 4. My TD is not out before the end of November anyway and the OCR is 29th November with banks clearly prepared to price in changes early. I can just sit back with my popcorn these days.
They're raising reserves by way of bidding for deposits - smells more like a liquidity concern to me. Having a look at the SBS balance sheet gives a few clues, last year ~85% of their assets held in loans, NZ banks in aggregate hold around 78%. Equally interesting is the low level deposits and very high level of redeemable shares.
If this is a move to increase liquidity, what is the forecast they're preparing for...
Nah, assuming you have a 8% mortgage, you're still better off financially paying lump sums to that instead.
Disciplined FHB savers - yes, very tempting indeed. I concur withy comments above whereas I wouldn't place all my hard earned savings in a "BBB" rated bank.
This is the closest any saver has come to covering inflation in more than 15 years.
This is not correct, only the last 5 years. Through the mid 2010s, inflation was consistently below 2%, under 1% for some of that and TD rates were around the 3.5-4% range, meaning after income tax at 33% you were ahead of inflation.
Which begs the obvious question ... Are the banks increasing their capital buffers (at the expense of future profits) because their loan books are stressed?
The big banks are likewise raising capital but are doing so at an institutional level rather then direct to depositors. Methinks all is not well in many banks. We'll know within the next 12 months I guess.
Hooray ! .... to risky for me (all my risk money is in crypto) but what it means is finally the banks are having to "earn" their money and have buffers - not just take someone's $100k deposit and use it as ""security"" for a $2,000,0000 30 year mortgage !!
However, we all know they make their money with margins, so they will still be doing OK - thank you very much ...however does not bode well for those wishing for interest rates to fall.
Oh well, you pay ya munny and you take your chances....
That's quite a nice jump above other competitors:)
I saw a few in the comments say they wouldn't put their savings into a BBB rated bank. Isn't there a government guarantee that's been introduced in NZ to protect our deposits of up to 100k? I'd presume that if you have up to 100k in savings then it should be pretty safe to keep them in a BBB rated bank, no?
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