ANZ removes the term deposit premium it used to justify passing on only 5 basis points to floating rate borrowers. But it retains all the margin grab on the mortgage side

[Updated with additional comment from ANZ.]

ANZ has cut its 18 month 'special' term deposit rate by -15 basis points.

That takes the bank's new rate down to 3.45% from 3.60%.

The 3.60% rate was pitched by ANZ as the reason it only passed on -5 bps of August's -25 bps Official Cash Rate cut to borrowers. The bank's story was "savers are benefiting, even though borrowers only get a part of the rate cut".

This means the 'benefit to savers' has lasted just five weeks. But the cost to borrowers looks like it will be more permanent.

Other banks used the same strategy, following ANZ's lead. It seems probable that they too will reduce or remove their 18 month specials as well, pocketing the margin gains.

The history of the ANZ 18 month rate is that it was reduced to 3.30% from 3.50% just after the March 2016 OCR rate cut. It stayed at this level for the 21 weeks to August 11 when it was raised to 3.60%. It has remained at this higher level for just five weeks, now reduced to 3.45%.

On August 11, just after the RBNZ rate cut, ANZ issued a media statement that included this:

Mr Hisco said ANZ was refocusing its lending and borrowing emphasis.

“On the deposits side, we have five times as many customers as those with home loans. Lifting term deposit rates will help customers grow their savings,” Mr Hisco said.

“We are sending a strong signal today to New Zealanders that at a time of record low interest rates, it is more responsible to pay down home loans and save, than borrow more. New Zealanders need to consider changing their financial strategies.”

A spokesperson for ANZ today said, "We’ve had an 8 or 9 month (currently 8-month term deposit special) at 3.50% since before the OCR change and we’ve retained our 3.25% 5-month term deposit rate, along with holding our Serious Saver rate. We had hoped lifting the 18 month term deposit special at the time of the last OCR would change behaviours but it hasn’t – the vast majority of NZers prefer TD’s at 12 months or less."

"You should also know that we’ve reduced our 2-year home loan rate. As you’ll know, about 75% of New Zealanders are on fixed rather than floating home loan rates so changes in the OCR have no impact on them," he said.

Use our deposit calculator to figure exactly how much benefit each option is worth; you can assess the value of more or less frequent interest payment terms, and the PIE products, comparing two situations side by side.

All carded, or advertised, term deposit rates for all institutions for terms less than one year are here, and for terms one-to-five years are here.

Term PIE rates are here.

The latest headline rate offers are in this table. (now updated with new UDC rates)

for a $25,000 deposit Rating 6 mths 1 yr 18 mths 2 yrs 3 yrs 5 yrs
               
AA- 3.15 3.25 3.45 3.35 3.40 3.60
ASB AA- 3.20 3.20 3.65 3.25 3.35 3.55
AA- 3.15 3.25 3.60 3.35 3.40 3.60
Kiwibank A+ 3.50 3.25   3.25 3.40 3.60
Westpac AA- 3.50 3.20 3.20 3.25 3.30 3.40
               
BBB 3.50 3.25 3.50 3.20 3.25  
Heartland Bank BBB 3.30 3.40 3.40 3.70 3.70 3.80
HSBC Premier AA- 2.80 3.00   3.00 3.05 3.15
RaboDirect A 3.30 3.40 3.40 3.45 3.55 3.80
SBS Bank BBB 3.55 3.25 3.60 3.35 3.40  
A- 3.15 3.20 3.25 3.30 3.40 3.70
UDC AA- 3.25 3.55 3.65 3.45 3.45 3.65

Our unique term deposit calculator can help quantify what each offer will net you.

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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9 Comments

Thanks DC for keeping the spotlight on this scuzzy behaviour.

“On the deposits side, we have five times as many customers as those with home loans. Lifting term deposit rates will help customers grow their savings,” Mr Hisco said.

Yes but how much do borrowers owe vs. savers hold? # of accounts is a pointless stat if you look at the actual value.

Scandalous behaviour.

Good point!

This is bollocks from ANZ. My mortgage comes up for renewal next month. They aren't going to get a look in.

We switched from them a couple of years ago after they took over National Bank. Huge drop in service levels for us and their mortgage rates are expensive. We haven't looked back.

Thanks David ... good focus /// its boom season for the banks at the moment ...

Big, uncaring, disingenuous, greed monster. That's my bank (for not very much longer) Hey Mr ANZ, don't for a minute believe that your customers don't notice this type of anti-social behaviour because we do. I stopped buying petrol from Shell many, many years ago after a similar piece of gouging and hey! look at them now...

They will lose customers over this, ASB has an 18 month special investment rate of 3.65% which is higher than ANZ's 3.60% in the first place. ANZ will have to match this rate or lose customer savings to other banks. Likewise with mortgages when they come up for renewal. But customers like us have to realise one thing, banks are not in the business to make friends so this type of behavior (although difficult to stomach) is hardly surprising...

Weka,

I am sure they will lose some customers,but not enough to worry them. It's not as though all the other banks are much/any more ethical.
Senior managers will just keep pocketing their obscenely large salaries.