Kiwibank offers 4% for a one year term deposit, 7-years after the last time it had such an offer. Challenger banks are now offering higher one-year rates as rate curve moves higher

Kiwibank has become the first 'main' bank to offer 4% per annum for a one-year term deposit in this interest rate cycle.

The last time a main bank had a 4% one-year rate was July 2015, seven years ago.

Kiwibank is itself following a range of challenger banks, and is very likely to be followed by the big Aussie-owned banks, although they may hold out for a while yet.

A one-year term deposit is about as far out as most Kiwi savers are prepared to go. All banks, including those big Aussie ones, offer rates above 4% for terms of two-years and longer.

At the very long-term, rate offers of 5% or more are now within range. China Construction Bank is the top offeror at 4.70% for five years. They are just the latest of many raising rates for the longer terms.

The top rate for six months is from both ICBC and China Construction Bank at 3.50%.

These rises will likely put pressure on other challenger banks, and that pressure will eventually flow through to the main banks. The immediate pressure on the main banks will now come from this latest Kiwibank move.

Kiwibank hasn't changed any other term deposit rates at this time.

Generally, banks will be holding back on rate changes ahead of Wednesday's Reserve Bank (RBNZ) Official Cash Rate (OCR) review. There will be no surprise if a 50 basis points rise is confirmed, and in fact this increase is now well priced in. Another 50 basis points is also priced in to the next RBNZ OCR review in August.

But what economists and analysts will be keenly following are any signals about the future rate track in the RBNZ commentary on Wednesday.

Internationally, the weekend's strong US jobs report locks in more US Federal Reserve rate hikes, likely to be 75 basis points at the end of the month, with more of the same priced in for their subsequent review as well. But changes in economic activity levels will be being closely watched by regulators and markets, and these could change wholesale interest rate market attitudes. After the US jobs data, markets resumed their bullish views on rising rates. And that may flow into local wholesale swap rate markets later Monday.

An easy way to work out how much extra you can earn is to use our full function deposit calculator. We have included it at the foot of this article. That will not only give you an after-tax result, you can tweak it for the added benefits of Term PIEs as well. It is better you have that extra interest than the bank (and especially if you are in the 39% tax bracket - PIEs are taxes at 28% flat).

The latest headline rate offers are in this table after the recent increases.

for a $25,000 deposit July 11, 2022	Rating	3/4 mths	5 / 6 / 7 mths	8 - 11 mths	1 yr	18mth	2 yrs	3 yrs
Main banks
ANZ	AA-	1.80	2.75	2.90	3.65	3.70	4.05	4.10
	AA-	1.80	2.75	2.95	3.65	3.75	4.05	4.30
	AA-	1.80	2.75	2.90	3.65	3.70	4.05	4.10
	A	1.85	2.85	3.00	4.00		4.10	4.20
	AA-	1.80	2.75	2.95	3.65	3.80	4.10	4.30
Other banks
China Constr. Bank	A	2.60	3.50	3.85	4.05	4.10	4.35	4.35
Co-operative Bank	BBB	1.50	2.75	2.95	3.60	3.80	4.10	4.30
Heartland Bank	BBB	1.80	3.40	3.45	4.00	3.80	4.10	4.20
HSBC	AA-	1.80	2.75	2.90	3.65		4.05	4.10
ICBC	A	2.50	3.50	3.85	4.05	4.05	4.30	4.40
	A	2.15	3.20	3.40	3.80	3.90	4.25	4.45
	BBB	1.65	2.65	2.90	3.65	3.65	4.05	4.30
	A-	1.80	2.75	2.95	3.65	3.80	4.10	4.30