ASB increases range of term deposit rates

Personal Finance

ASB lifts range of term deposit rates with five-year rate increasing 75 basis points to 1.75%

1st Mar 21, 8:00am by Gareth Vaughan

ASB is increasing a range of term deposit rates, including lifting its five-year rate by 75 basis points to 1.75%, and its four-year rate by 50 basis points to 1.50%. The changes are effective from Tuesday.

Here's the bank's statement.

ASB is increasing its term deposit rates, including lifting the 60-month term deposit rate by 0.75% to a market leading 1.75%.

ASB’s Executive General Manager of Retail Banking, Craig Sims, says ASB is taking the opportunity to offer Kiwis with cash savings some highly competitive term deposit options while also balancing the needs of borrowers who have been benefiting for some time from an extremely low interest rate environment.

“While there’s been much focus on home loan rates, customers with funds to invest are often seeking to balance their portfolios, and term deposits can be an important part of the mix.

“Given the performance of the New Zealand economy through COVID-19 has been stronger than anyone anticipated and our commitment to helping the financial progress of all New Zealanders we’re pleased to be able to support our savers with these market leading term deposit rates.”

In addition to the new 60-month rate, ASB has also increased the rates for deposit terms from 9 to 48 months. The below rate changes are effective from Tuesday 2 March 2021.

See all banks' carded, or advertised, term deposit rates for one-to five years here. And see all banks carded, or advertised, term deposit rates for one to nine months here.

We welcome your comments below. If you are not already registered, please register to comment

Remember we welcome robust, respectful and insightful debate. We don't welcome abusive or defamatory comments and will de-register those repeatedly making such comments. Our current comment policy is here.

20 Comments

by 8014 | 1st Mar 21, 8:23am 1614540192

"While there’s been much focus on home loan rates, we'd like to distract you with this announcement ... before we start lifting home loan rates."

by Nzdan | 1st Mar 21, 8:31am 1614540686

Come on now ASB, the FLP program is for lending. Not for reducing your overheads and passing on the difference to term deposits!!!!

by wewillsee | 1st Mar 21, 8:56am 1614542162

Think they are sending a signal to the RBNZ? Or something else?

by dago | 1st Mar 21, 9:02am 1614542521

Think they are not cool with becoming obsolete and being replaced with git-coin or other

by dago | 1st Mar 21, 9:24am 1614543846

GME has scared finance. They could be only a meme away from disaster for example houses being traded for something other than cash

by bw | 1st Mar 21, 9:36am 1614544616

GME may have scared finance (maybe even scarred it!) but if it has, then any liquidation (of anything) that's coming will be into one commodity - cash.
Will that cash immediately re-enter illiquid asset markets born of Monetary Policy madness? I doubt it.

by dago | 1st Mar 21, 9:58am 1614545888

Hard to say but certainly hasn't been the cleverest idea to provoke the younger gen by locking them out of property

by EdwardD | 1st Mar 21, 1:39pm 1614559191

I totally agree. I may be an old fart, but I find following GME really insightful. Lots of anger and 'loss of hope' within the Reddit crowd.

by dago | 1st Mar 21, 2:34pm 1614562493

Agreed, collective action happens Extremely fast

by bobestm | 1st Mar 21, 9:13am 1614543216

As I understand this, FLP is merely an asset swap - "The programme will require approved eligible collateral to be pledged" i.e. government bonds pledged for the period that FLP programme runs for cash that will be lent to individuals and businesses to purchase assets (i.e. an asset swap).

Please help me understand this better.

by Audaxes | 1st Mar 21, 10:24am 1614547452

It's a repurchase agreement between the RBNZ and each participating bank.

Proforma accounting before repo and after secured borrowing can be viewed here - EXHIBIT 2.

Notably there is no balance sheet expansion. Primarily the RBNZ will transform what may have been costly short term debt into longer term (3yr) OCR costed debt.

by Tom Valen | 1st Mar 21, 9:34am 1614544452

So for a 12 month term deposit where I used to get a paltry 0.75% I could now be milking it with a 0.80% rate.
GAGF ASB, you are taking the proverbial.

by TuaWai Smith | 2nd Mar 21, 3:34am 1614609264

Yes, agree. The asb is saying it really wants to help out savers with its benevolent rates.
I say they are hurting for deposits to fund the real estate loans.
I for one have moved significant deposits out of their bank as my 5 year 5% TDs came due. They think I was going to leave it with them at .75%??? Or a paltry 1.75% . Too little, too late.
Bye, bye asb. Closing my accounts and moving offshore where they have deposit guarantees.

by Uncle Bulgaria | 1st Mar 21, 10:02am 1614546144

Orr won’t like the look of that. Money printing machine will get a turbo boost this month.

by fortunr | 1st Mar 21, 10:08am 1614546502

Still not good enough, especially with regards to the longer terms. In 2-3 years time, interest rates are going to be much higher than that - so there is no point going longer term now, when it is likely that interest rates will take off in a couple of years' time. Just look at how international markets are pricing bonds.

Moreover, considering the over-inflated NZ housing Ponzi, the likelihood of an OBR event within the next 5 years is not negligible, and savers are still not rewarded enough for this risk. If you stay cash, at least you can take your money away quickly at the first signs of trouble.
And if everybody waits before entering new term deposits, this will make an interesting environment for the profile of NZ banks' funding.
Savers should wait and see if other banks can at least significantly improve on this.

by Audaxes | 1st Mar 21, 10:27am 1614547655

ASB lifts range of term deposit rates with five-year rate increasing 75 basis points to 1.75%
A step in the right direction, given investors in the recent Westpac five year issue got stunned with a 1.439% per annum return. Isn't the lagging CPI indicator most recently recorded at 1.4%? No credit risk premium at all.

by karl seastrand | 1st Mar 21, 12:18pm 1614554317

Can't wait to get my TDs out near the end of the year and put most of the funds in overseas banks with Govt guarantees. I view the currency rate gamble I will be taking as a positive way to diversify and spread my risk. The TD rates in Thailand and the USA are even (much) lower than here but I don't care.

by Carlos67 | 2nd Mar 21, 3:36pm 1614652608

How much of a TD are we really talking here ? I would rather buy a house in New Plymouth and rent it out than move mine offshore.

by karl seastrand | 1st Mar 21, 12:11pm 1614553898

But if the cracks start appearing in the banking system and you are locked in for 5 years unsecured.......
Not to mention IMO it is 50%+ chance rates will rise early next year.

by Carlos67 | 1st Mar 21, 12:41pm 1614555691

Woo Hoo here we go baby, the only way is Up. My 12 month TD is out in August so a lot could change between now and then.