Banks are lining up to cut term deposit rates ahead of the Reserve Bank's Official Cash Rate review on Wednesday.
Economists are now almost universally sure a 25 basis points rate cut is coming then.
Perhaps banks are trying not to get their name in lights with cuts to savers when all eyes will be on them and their rate reactions following Governor Adrian Orr's announcement.
Today (Monday, August 5) both Kiwibank and Westpac have trimmed some key rates.
These changes are relatively small, so any follow up post-OCR cuts might look smaller after today's positioning.
Westpac has cut -10 bps from their six month rate, taking it down to 2.95%. They have also cut -5 bps from their nine month rate, also aligning it at 2.95%. There are no other changes to shorter or longer rates by Westpac.
Kiwibank has been more comprehensive. It has trimmed -10 bps from most rates for terms of 3 months to 5 years.
As we have noted before, "3%" is now the gold standard for term deposits by banks, and for many savers this is a new and uncomfortably low level.
Standout rates (that may not last) include ANZ's eight month offer of 3.20% (and 5 years), BNZ's seven month offer of 3.15%, Heartland's 3.25% for 15 months and their 3.50% rate for five years. Rabobank is still offering 3.35% for five years.
For readers looking for risk-free returns, we should also note that the 1.50% offer for the Government's Kiwi Bonds (for fixed 6 month, one year, two year and four year terms) is very likely to follow the OCR down on Wednesday if it is cut then.
The updated rates in the table below are the highest offered by each institution for the terms listed. You will, however, need to check how often interest is credited or paid. That important factor is not filtered in the table and rates with various interest payment/credit arrangements are mixed here. However, our full tables do disclose the offer basis. (The codes are explained here).
Our unique term deposit calculator can help quantify what each offer will net you.
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.
The latest headline rate offers are in this table.
| for a $25,000 deposit | Rating | 3/4 mths | 5 / 6 / 7 mths |
8 - 11 mths |
1 yr | 18mths | 2 yrs | 3 yrs |
| Main banks | ||||||||
| ANZ | AA- | 2.65 | 3.05 | 3.05 | 3.00 | 3.00 | 3.05 | 3.10 |
 |
AA- | 2.65 | 3.05 | 3.00 | 3.00 | 3.00 | 3.00 | 3.00 |
 |
AA- | 2.65 | 3.15 | 3.10 | 3.00 | 3.00 | 3.00 | 3.00 |
| Kiwibank | A | 2.65
|
3.05
|
3.05
|
3.00
|
3.00
|
3.05
|
|
 |
AA- | 2.65 | 2.95
|
2.95
|
3.00 | 3.00 | 3.00 | 3.00 |
| Other banks | ||||||||
| Co-operative Bank | BBB | 2.80 | 2.95 | 2.95 | 2.95 | 3.00 | 3.00 | 3.00 |
 |
BBB | 3.00 | 3.15 | 3.15 | 3.20 | 3.20 | 3.25 | 3.40 |
| HSBC Premier | AA- | 2.40 | 2.70 | 2.70 | 2.70 | 2.70 | 2.70 | |
| ICBC | A | 2.85 | 3.10 | 3.15 | 3.15 | 3.15 | 3.10 | 3.10 |
 |
A | 2.50 | 3.10 | 3.10 | 3.20 | 3.15 | 3.15 | 3.15 |
 |
BBB | 2.75 | 3.10 | 3.05 | 3.00 | 3.00 | 3.00 | 3.00 |
 |
A- | 2.65 | 3.00 | 3.00 | 3.00 | 3.00 | 3.00 | 3.00 |
Term deposit rates
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48 Comments
You are right, but the question is: how do you know how much you have left to live? Say, you plan to live for another 20 years, and spend accordingly. But 20 years later you are still healthy and feel like you have at least another 10 years left, with no money left in the bank. What do you do?
In some other countries, the standard approach is to buy an annuity. You hand over a lump sum, and in return receive a constant stream of income (rather higher than savings rates) guaranteed for the rest of your life. If you die early, you lose out, if you live a long time, you do quite nicely - it essentially insures you against a long life. I don't know why this isn't more popular here, perhaps people aren't confident enough that their children can stand on their own two feet and want to live in relative poverty to ensure they can hand over an inheritance?
You’ve previously said that you are quite a few years away from superannuation/KiwiSaver age given that you are in your 50s. Only 3.5 years left until your life savings term deposit expires. Belt tightening time for you soon, unless you have some prudent investments lined up. What do you have lined up?
You’ve often joked about landlords becoming insolvent. Rents are rising while while mortgage rates are falling. Term deposit returns, your primary source of income, plummeting. Perhaps hold of on the insolvency jokes for a while.
...in a low inflation environment, its less a concern. As inflation falls further as the economy weakens, its less a worry. When deflation breaks out, cash in deposit boxes gains value. Retirees still live well. Why are you so concerned for those whom are already cashed up?
For retirees income from savings is now very tricky. Very few would have $1mill invested. On current TDs that nets less than $30k. But as contributors here point out that party can,on a sensible scale, spend capital. My guess is less than 5% of retirees would have that level of luxury. What you may see though is the cancelling of private health insurance. Sthn X about $650.00 monthly for an elderly married couple? That will outturn very expensively on our public health system, especially of course, because this is the stage of life when health problems escalate.
RP, you are a master of deflecting questions, the question at hand, asked by sharetrader, is
"where should people with term deposits invest their money for a better return?"
It's a legitimate question, I'm not trying to get into arguments, so do you have an answer/opinion? If not that's fine but no point arguing
As I posted above, one alternative is to buy an annuity. This gives you a higher, guaranteed, regular income in return for sacrificing the lump sum. Perfect option for retirement - who needs the money once your dead?
As an example (I'm still young so haven't done exhaustive research), this company will pay a 65 year old a 5% return, paid fortnightly, for the rest of their life, or 3.75% if you want inflation protection.
https://www.lifetimeincome.co.nz/calculators/lifetime-income-calculator/
When I eventually retire, I will strongly consider something like this as a part of my retirement strategy.
Yes, both reasonable points. I would be wanting to do some research on the company and their backing before giving them too much. I don't know if it's feasible to spread your money around a number of companies to reduce the counter party risk - maybe there's an effect where larger sums are able to negotiate better rates like with term deposits?
Like I said, my research is limited but it's an option that seems sensible to me and rarely seems to be talked about in NZ.
You also don't have to put all your money into an annuity. Put some in to cover your basic needs then you can be a bit riskier with the rest.
Also, you can create your own annuity by putting it in a diverse global share index fund and applying the well-tested 4% rule.
Lol, another Spruiker talking rubbish. I have answered the question. Like Buylowsellhigh (DD), you just couldnt handle the answer. What I find amusing is there is much focus on declining interest returns of principle, yet the principle saved is conveniently overlooked. Again, celebrate the achiements of the ones who are ahead of you in life and worry about whats in store for you. Don't be just another "has been"
even warren buffet cant find somewhere that not overvalued to invest his cash
Buffett hasn't had a major acquisition in several years and has even pulled back on one of his newer ways to deploy cash, slowing down repurchases of Berkshire's own stock in the second quarter. The result was that the company's cash pile -- a major focus for investors in recent years -- surged to a record $122b
https://www.nzherald.co.nz/business/news/article.cfm?c_id=3&objectid=12…
yip ...warren buffet like a dinosaur now out of time
He happen to fluke a period in history where we saw huge increases in fossil fuel burning, resource plundering and financialisation of debt... and help himself to the buffet he certainly did
When it crashes he will still be preaching value add, under valued acquisitions and infinite growth..
The final irony being that the cash pile will be a stash of worthless pixels
And that's based on reported CPI - I can't be the only one with >10% increases in rates and insurance this year, leading to probably closer to 5% inflated basic living cost (retired (early) but spend significantly more than a pension, fortunately got probably enough loot). I expect we'll see further rises in equity prices with further cuts - so fully priced assets becomes a relative term. Anyone investing for the *long* term, and satisfied with a 5% return, and not expecting to use the capital (so not concerned about price fluctuations) can still find it. But it's no longer easy and has some risk of failure.
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