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Finance companies raise term deposit rates as competition for funds returns
December 2nd, 2009PSIS, Southern Cross Building Society and NZF, along with other institutions, this morning raised a number of term deposit rates. The moves come after a quiet couple of weeks in the deposit rate market, and indicate renewed competition for funds between institutions.
See and compare all deposit rates for terms less than one year here, and for terms one year and greater here.
New prudential liquidity guidelines from the Reserve Bank of New Zealand in June increased competition between banks in New Zealand to attract more local funding through term deposits, putting upward pressure on deposit rates. This in turn put pressure on smaller financial institutions, many of which are seeking funds that mature after October 2010, when the current government guarantee expires.
PSIS swapped its special term deposit offer from five months (was 4.75%) to six months at 4.8%.
Meanwhile, Southern Cross raised both its six and nine month term deposit rates by 20 bps to 5%; and its one and two year deposit rates by 20 bps to 5.2%.
NZF made a number of changes to its six month through three year deposit rates. For depoits over NZ$10,000, notable moves were its six month rate up 40 bps to 5%; and the introduction of an 18 month special at 7.5%.
Other finance companies that made changes to deposits rates are Equitable, which raised its six month rate 100 bps to 5.5%, Fisher & Paykel Finance, HBS Building Society, Credit Union North, Nelson Building Society and Presbyterian Savings.
Tags: Credit Union North, Equitable, Fisher & Paykel Finance, HBS Building Society, Interest Rates, Nelson Building Society, NZF, PSIS, Southern Cross, term deposit rates
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December 3rd, 2009 at 2:58 pm
Hey, you didn’t mention that wonderful finance company Asset Finance Ltd which is offering a magnificent 11.25% for 19 months. This is in a letter I got today headed “Why wouldn’t you take advantage of Asset Finance’s withdrawal from the Crown Deposit Guarantee Scheme?” Why not indeed? The letter says “…we believe that pulling out of the scheme right now is conducive to our long-term financial strategy.” and “…we believe we can continue to attract deposits for terms outside of the guarantee period, as we have been doing recently.” Asset Finance is well placed to receive deposits – after all, its loan book is only 48% impaired according to Note 26 in its latest financial statements (which curiously don’t accompany the letter) and there is only one instance of related party lending. Moreover …”for every $100 you invest, our stakeholders (aka as the directors) invest $11.” This is very handy, as this 100:11 ratio helped the company put right the covenant breaches indentified by the trustee in the 2009 year (Note 18). This is a little ripper of a finance company and deserves the immediate support of every elderly couple or widow in the country to help prevent any further covenant breaches and losses, and to overcome the continuing impairments in the loan book.