ANZ, National Bank hike longer term deposit rates; 5 yr to 6.75%

ANZ and National Bank has this morning increased its longer term deposit rates by between 25 and 50 basis points (bps). The move takes the rates above the majority of other banks' offers, with ANZ and National Bank's five year deposit rates now out to 6.75%. National Bank raised its one year term deposit rate by 50 bps to 5%; its two year rate by 50 bps to 5.5%; three year by 50 bps to 6%; four year by 25 bps to 6.25%; and five year by 25 bps to 6.75%. National Bank is also offering 5.25% for a 'special' 18 month rate. ANZ made the same changes as National Bank. Competitive rates from other banks are ASB's 5%, Kiwibank's 5.1% and SBS's special 5.15% for one year deposits; and Raboplus' 6.25% for four years. See here for all term deposit rate comparisons for up to 1 year and for 1 year and over. While much of the focus recently has been on rising fixed mortgage rates, longer deposit rates have started to rise as well. It is expected other banks will follow ANZ National's latest move.

The Reserve Bank earlier this year introduced new prudential liquidity guidelines, forcing banks to raise more funds from local depositors and for longer terms. This was done in an effort to reduce the banks' reliance on the short-term 'hot' money from global wholesale money markets, which can freeze up during a credit crisis as witnessed in the latter months of 2008 following the collapse of Lehman Brothers in the US.

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