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ASB lifts 6 mth term deposit rate to 8 month high of 5% (Update 1)

ASB lifts 6 mth term deposit rate to 8 month high of 5% (Update 1)

ASB has introduced a new six month term deposit special at 5% for deposits over NZ$10,000 with interest paid at maturity. This follows a similar move last week by TSB which takes six month deposit rates to 250 basis points above the Official Cash Rate, which is at a record low of 2.5%. (Update 1 includes Kiwibank move.) This is the first major bank to lift six month term deposit rates over 5% since January and extends a rise in ASB's 6 month rate from a low of 3.75%. ASB also increased its regular (non special) 6 month rate from 3.75% to 4.25%. The move shows competition between banks for the shorter term deposit market is heating up, with many lifting their four to nine month deposit rates over the past few months. The Reserve Bank has told banks to attract more local funding in an effort to steer them away from the 'hot money' on global wholesale markets, which makes banks vulnerable to any new freeze in global credit markets. See and compare term deposit rates for terms less than one year here, and for terms one year and greater here.

The last time ASB offered a six month term deposit rate at 5% for a NZ$10,000 deposit was at the end of January this year. The rate sank to as low as 3.75% in May. At the same time as this move, ASB lowered its five month term deposit rate from 4.6% to 3.75%. Meanwhile, Kiwibank has switched around its 'fighting' rate. The self-styled Aussie-battler raised its six month rate from 3.75% to 4.6%, at the same time lowering its four month rate from 4.6% to 3.75%

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