Not only are mortgage rates falling slowly, term deposit rates are too.
This morning, Kiwibank pushed out its 4% special TD rate from 4 months to 6 months.
This means its 4 month term deposit is now 3.30%, down 70 bps, and its six month TD is 4.00%, up 25 bps.
These changes follow Friday's reductions by Westpac who reduced their 6 month, 9 month and 1 year TD rates.
Westpac's 6 month TD is now 3.75% down 25 bps from 4.00%, their nine month TD is now 3.85% down 15 bps from 4.00%, and their one year TD is now 4.10%, down 10 bps from 4.20%.
Westpac's SuperGold rates fall to the same amounts. That product pays interest monthly to qualifying customers.
Recent small falls in wholesale swap rates may be giving an impetus to these changes, and there are reports of flagging loan demand.
Banks make most of their margins by increased lending in the mortgage market and home owners are getting very aggressive in swtiching banks in search of lower mortgage rates. In fact, interest.co.nz estimates that at current rates of conversion, fixed rate mortgage volumes will exceed floating again by October. This was last the case in February 2011. Fixed rate mortgages have narrower margins for banks than floating rate deals.
The term deposit rate changes today and Friday now position banks as follows:
|for a $10,000 TD||3 mths||6 mths||1 year||2 years||3 years|
|% pa||% pa||% pa||% pa||% pa|
|SBS / HBS||BBB||3.30||4.10||4.20||4.20||4.50|
Use our full-function deposit calculator to work out your after-tax return.
For some people, a Term PIE may give a better return. Check out those rates here ».