Banks are competing harder for term deposits with rising interest rates, despite little wholesale movement

Banks are competing harder for term deposits with rising interest rates, despite little wholesale movement

Over the past two weeks, banks have been increasing their term deposit rates. They have generally been small moves, but a realignment is underway, forcing others to respond. (Updated with Friday's increases from RaboDirect.)

You can find up-to-date advertised rates for all banks here » for terms of less than a year, and here » for terms one to five years.

You can also track the changing market averages in this useful chart tool.

These recent increases contrast with the lack of recent change in wholesale swap rate levels.

The institutions that have made recent changes include:

BNZ which raised its one year TD rate by +0.10% to 4.70% pa from 4.60%.

SBS (and related HBS) which also raised its one year TD rate by +0.10%, but only to 4.50% from 4.40%

TSB which has raised its rates across the board for all terms 6 months through to 4 years. The increases ranged from +0.05% (for the 24 month term) all the way up to a rise of +0.20% for its six month and eighteen month rates. These are now 4.45% and 4.70% respectively.

The Co-operative Bank (formerly PSIS) has raised its one year TD rate by 0.25% to 4.55%. (It has also made a range of adjustments to its $2,000 tier level.)

Kiwibank recently raised its one to four year rates by between +0.10% and 0.20%.

These realignments allow us to identify those banks with the highest rates for each term:

  Highest*  
Term Rate % Offerer
------------ ---------- ----------------------------------------------------
1 month 3.00% ANZ, ASB, National, RaboDirect, Westpac
3 months 3.70% RaboDirect
6 months 4.50% BNZ, RaboDirect
1 year 4.70% BNZ (interest paid monthly), Kiwibank, RaboDirect
18 months 4.75% RaboDirect
2 years 5.00% Kiwibank, RaboDirect
3 years 5.30% Kiwibank
4 years 5.60% Kiwibank
5 years 6.00% RaboDirect, Kiwibank

* Interest is paid at maturity for these rates, except as noted. Rates listed here are for a $10,000 deposit.

The only other institution that has made rate changes in the past week has been the Nelson Building Society, which has also raised rates but basically only up to best-bank levels.

Because banks compete hard for new business, it is often very worthwhile to press them firmly for rates higher than they publish on their rate cards. Most banks give managers authority to offer higher rates, and these will be easier to negotiate the larger your deposit. If your term deposit roll-over is not 'new business' for your bank, you would be wise to seek quotes from other banks first before you talk to your existing bank. Note that for very large amounts, bank rate cards may not apply.

We welcome your help to improve our coverage of this issue. Any examples or experiences to relate? Any links to other news, data or research to shed more light on this? Any insight or views on what might happen next or what should happen next? Any errors to correct?

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