Sudden risk-off conditions and diving official benchmark interest rates have seen wholesale money markets in turmoil.
Poor liquidity availability has corporates, governments and banks all scrambling to shore up their balance sheets for inevitable stress.
One lesson well-learned in the 2008-2012 GFC was that wholesale funding is a fair-weather friend.
You might think that conservative and loyal investors would be highly valued by institutions and that they would work hard to ensure holding term deposits was an attractive option.
They are. BNZ raising its 18 month offer to 2.65% is one example. And despite all this turmoil, it is a credit to New Zealand banks generally that TD rates haven't fallen quicker recently.
But banks are also facing diving loan demand.
This tension between the need to keep depositors from withdrawing and yet not needing a flood of new money puts retail investors on the back foot - especially as there is little real competition by banks for their loyalty and no depositor has any real power. There are squillions of investors and only ten retail banks, but only five are market significant. There is a negotiating imbalance that works against customers at this time.
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The best you can do is keep an eye out for good deals and go as long as you feel comfortable with, if you have decided to keep funds in TDs. (There is zero point keeping any funds in savings accounts - interest is trending to 0.05% pa in these floating "yesterday" accounts.
The table below suggests that 2.65%-2.80% for eighteen months could be a good deal over that time. Higher rates are on offer for shorter terms but expectations won't be high that they will last.
And when deposit guarantees are instituted (it is Government policy to bring them in, even at a modest level) that will put further downward pressure on TD offer rates. In every other country where deposit guarantees are in place, TD offer rates are very much lower than in New Zealand. There is no reason to expect that to be different here when the promised guarantee is in place. And depending on the stresses the banking system may face, the guarantee system could be rolled out quickly here - recall it was an 'overnight' decision the last time it was used.
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.
The latest headline rate offers are in this table and marking the changes this week.
|for a $25,000 deposit||Rating||3/4 mths||5 / 6 / 7
|8 - 11
|1 yr||18mths||2 yrs||3 yrs|