New Zealand's largest bank trims its hi-viz TD rates, leaving its rivals with better offers, and the challenger banks with much better offers. Weak loan demand may be behind the move

ANZ is changing a set of its term deposit rates as of January 19.

It is increasing two and cutting three rates - reducing its competitiveness in some key durations.

The term deposit rate changes to come are as follows:

  • 8-month rate up +10 bps to 3.40%.
  • 9-month rate down -15 bps to 3.35%.
  • 1-year rate up +10 bps to 3.40%.
  • 18-month rate down -10 bps to 3.50%.
  • 2-year rate down -10 bps to 3.65%.

The effective change is a flattening of ANZ’s overall rate offer around its 3.40% 1-year rate.

No other terms are affected at this time. However, equivalent changes have been made for the term PIE fund offerings.

Heartland Bank and ICBC currently offer the most attractive rates over these terms.

Amongst the major banks, ASB has the best rates for 9-month, 18-month and 2-year terms.

BNZ, Kiwibank and Westpac all outshine ANZ when it comes to 1-year terms.

However challenger banks all top the majors for carded returns.

Today (Thursday), wholesale rates have shown some upward movement, although for the terms in focus here, those rises are minor.

One reason ANZ may have moved to trim rates might be weak loan demand. Today's REINZ data shows that housing transactions were -10% lower in December than for the same month a year ago.

And Reserve Bank mortgage tracking shows only modest mortgage market growth. This market has turned to one where volume increases are hard to win, and a zero-sum style of competition is setting in.

In the past, the major banks tended to eschew competition for more market share, rather preferring to protect profitability with their embedded customer bases. They will protect what they have but pull back on their competitive instincts

For higher rates, you need to assess the offers of institutions with a lower credit rating. Rate offers rise significantly from non-bank institutions with sub-investment grade ("junk") credit ratings.

Using our deposit calculator to figure out 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 financial institutions for terms of less than one year are here, and for terms of one-to-five years are here.

Term PIE rates are here.

The latest headline rate offers are in this table.

for a $25,000 deposit Rating 3/4 mths 5/6/7 mths 8/9 mths 1 yr 18 mths 2 yrs 3 yrs
Main banks                
AA- 3.00 3.30 3.40 3.40 3.50 3.65 3.80
ASB AA- 3.00 3.35 3.50 3.25 3.65 3.80 3.90
AA- 3.00 3.30 3.35 3.50 3.60 3.70 3.90
Kiwibank A 3.00 3.30 3.35 3.50   3.75 3.85
Westpac AA- 3.00 3.30 3.35 3.50 3.50 3.70 3.80
Other banks                
BBB 2.95 3.30 3.50 3.60 3.65 3.80 4.00
Heartland Bank BBB 3.25 3.45 3.60 3.60 3.70 3.80 3.85
HSBC Premier AA- 2.50 2.80 2.80 2.90   2.90 3.00
ICBC A 3.00 3.25 3.55 3.35 3.75 3.85 3.95
RaboDirect A 3.00 3.35 3.35 3.40 3.70 3.85 3.95
RaboDirect BBB 3.30 3.30 3.50 3.50 3.65 3.85 4.00
A- 3.00 3.30 3.45 3.30 3.65 3.85 4.05
Selected fincos                
B*       5.00 5.30 5.70 5.80
F&P Finance BB* 3.45 4.00 4.10 4.15 4.25 4.35 4.50
Liberty Finance BBB- 3.60 3.95 4.25 4.30 4.35 4.40 4.45
UDC BBB 3.00 3.50 3.75 3.80 3.75 3.85 3.85
  * = these credit ratings in this review that are not investment grade.  

Rates in this table are the highest offered by each institution for the terms listed. You however will need to check how often interest is credited or paid. That important factor is not filtered in the above table and rates with various interest payment/credit arrangements are mixed here. However, our full tables do disclose the offer basis.

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

Term deposit rates

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In recent times the banks seem to have been able to reduce provisionings. I predict that they will have to start increasing them in future....

This could be a transformational next 6 months or so….
US 30yr now through 2.60% - and 2yr still on a tear – having a go at 2.06%.
Been around long enough to have witnessed that in the early phase it’s not so much the cost of credit that matters, but rather the ease of availability – nothing new in that.
But at the latter stages it becomes both the cost and lack of availability that spoils the party – especially for the newbies and over leveraged.
Again, nothing new in that - it simply happens.

I understand that mortgage rates in Japan are in the 3-4% range, yet most people depositors are making far less than 1% on their cash.