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New lower term deposit rates from ASB push its offers to among the lowest in the market and an ominous sign for savers because other banks may follow

New lower term deposit rates from ASB push its offers to among the lowest in the market and an ominous sign for savers because other banks may follow

At the same time it cut its 6 month and one year home loan rates, and raised its two year mortgage rate, it has also cut its term deposit rates across the board to 12 month.

The new rates drop their offers to market lows for the key rates.

Their new three month rate is now 1.90% and a -5 bps reduction.

Their new six month rate is now 2.60% and a drop of -15 bps.

And their new one year rate is now 2.55% and a -5 bps reduction.

ASB now offers the lowest term deposit rates of any major bank for all terms. ASB has tended to lead the savings rate offers down, and more recently they have been followed when they cut lower. Time will tell with this latest reduction.

At this time, ANZ and Kiwibank are the main banks with marginally higher rates in key tenors.

Compared with challenger banks, only HSBC offers lower rates than ASB.

After these changes, the highest term deposit rates are offered by both Heartland Bank and ICBC.

But no main bank offers any tenor at 3% or above, all the way out to five years.

Almost no bank is making any attempt to offer higher rates for longer terms. In fact, in most rate offer cards, the highest rates are now at about the nine month tenor. 'Specials' are rare.

The latest reductions come even as wholesale rates have started turning back down after a short firming period.

Given inflation is running at 1.5%, after-tax, after-inflation yields from term deposits are likely to approach zero at some point if this trend continues.

For readers looking for risk-free returns, we should also note that the 1.00% offer for the Government's Kiwi Bonds (for fixed 6 month, one year, two year and four year terms) is now available.

That the Government now offers Kiwi Bonds at a -50 bps discount to inflation is not a great signal to those who need low-risk interest income. That will mean capital decumulation by retired people will be accelerating. Longer life expectancy may well put earlier pressure on social services and income support than Treasury is expecting.

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.

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 - 11
mths
  1 yr   18mths 2 yrs 3 yrs
Main banks                
ANZ AA- 2.30 2.70 2.75 2.65 2.60 2.60 2.60
ASB AA- 2.15 2.55 2.60 2.55 2.50 2.50 2.50
AA- 2.25 2.65 2.65 2.60 2.50 2.50 2.50
Kiwibank A 2.25 2.65 2.75 2.75   2.50 2.50
Westpac AA- 2.30 2.70 2.75 2.60 2.60 2.60 2.60
Other banks                
Co-operative Bank BBB 2.05 2.60 2.60 2.60 2.50 2.50 2.50
Heartland Bank BBB 2.40 2.80 2.80 2.80 2.90* 2.80 2.80
HSBC Premier AA- 1.90 2.20 2.20 2.05   2.05 2.05
ICBC A 2.50 2.85 2.85 2.80 2.80 2.80 2.80
Rabobank A 2.05 2.70 2.65 2.55 2.50 2.50 2.50
RaboDirect BBB 2.25 2.75 2.75 2.60 2.60 2.60 2.60
A- 2.25 2.60 2.65 2.60 2.60 2.60 2.60

* = 15 months

Term deposit rates

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6 Comments

A couple of weeks ago 2.75% from the major banks looked good for 5 years. Today, at about 10% lower; around 2.5% - and that, is still looking good...

What are they going to do if customers start withdrawing those term deposit balances? Are the banks even concerned about this? I would think not......

Some nice companies on the NZX continue to produce nice divies.

Okay I give up time to buy a house and save our economy. ASB always have a special 9 month rate tho.......

Us depositors need media support to turn this around with talk of; tipping points, account extinctions, and the end of civilization etc

low interest causing a pension crisis is how they are describing it,already cutting corporate pensions in europe.if you have a 5 year deposit maturing today that was returning 5.5%,would you re-invest at 2.5% for another 5 years?my guess is that all the money will be rolling over short term,90 days to 12 months.that money could be tempted into property syndicates,annuities.plenty of one-man think tanks out there ready to advise you how to make them rich.

Days to the General Election: 24
See Party Policies here. Party Lists here.