Table below updated with Westpac's changes. It is further updated with BNZ's changes.
The first moves on term deposit rates following last week's +75 basis points Official Cash Rate hike are starting to come through, so it is timely to review where banks stand with these offers.
There have been increases from challenger banks recently, and now a main bank, ANZ has moved all their term deposit rates higher.
Currently, the highest rate offers are from Rabobank, who made their move a few days ago.
But the latest increase from ANZ certainly deserve respect too, and they are pitched sharply higher than any other rate offer from a main bank rival.
If ANZ becomes the benchmark, or even a floor, then overall term deposit rates will rise to be only +0.1% above the OCR rate for a 6 month term, and only 0.8% higher for a 1 year term. These are unusually low premiums. Over the past twelve months these premiums have been +0.6% and 1.2% respectively.
To restore those recent average premiums, you could expect the 6 month bank average rate to rise to 4.85% and the one year rate rise to 5.45%. That means there is still a long way for term deposit rates to rise yet.
If we step back a bit further and look at the premiums in place for the two years prior to the onset of the pandemic (so and average of 2018 and 2019) then they were +1.5% above the OCR levels for both a 6 and 12 month term. So you would expect 5.75% rate offers on that basis.
That is another +60 to +90 bps more than what is being offered now. And that is a lot.
Given the suppressing effect of the Funding for Lending Programme (FLP), perhaps you will be waiting a while. But the FLP ends next week, so that impact will fade.
And don't forget, this assessment of on the basis that the OCR is 4.25%. Economists expect to to be 5.00% by March 2023 and 5.75% by June 2023. Market pricing largely supports that. That is another +150 bps in 200 days - and the FLP will be well in the background then.
Those are all upside influences. Downside influences are dominated by expectations about the state of the global economy (not to mention the domestic economy). If central bankers really are ok with inducing a recession to head off inflation, perhaps there just won't be the economic activity around to support higher term deposit interest rates, no matter what the OCR is sitting at.
You are on your own trying to figure out what the future will really bring. Stay clear of any scribe who 'knows'.
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 December 1, 2022 |
Rating | 3/4 mths |
5 / 6 / 7 mths |
8 - 11 mths |
1 yr | 18mth | 2 yrs | 3 yrs |
| Main banks | ||||||||
| ANZ | AA- | 2.70 | 4.35 | 4.70 | 5.10 | 5.10 | 5.15 | 5.20 |
 |
AA- | 2.50 | 4.00 | 4.35 | 4.60 | 4.60 | 5.00 | 5.10 |
 |
AA- | 3.00 | 4.40 | 5.00 | 5.10 | 5.10 | 5.10 | 5.10 |
 |
A | 2.50 | 4.00 | 4.10 | 4.60 | 5.00 | 5.00 | |
 |
AA- | 3.00 | 4.35 | 4.60 | 5.10 | 5.10 | 5.20 | 5.20 |
| Other banks | ||||||||
| China Constr. Bank | A | 3.60 | 4.45 | 4.55 | 4.75 | 4.75 | 4.85 | 4.85 |
| Co-operative Bank | BBB | 2.30 | 4.05 | 4.10 | 4.75 | 4.85 | 5.05 | 5.05 |
| Heartland Bank | BBB | 2.80 | 4.30 | 4.45 | 5.00 | 5.00 | 5.00 | 5.00 |
| HSBC | AA- | 2.30 | 3.65 | 4.00 | 4.30 | 4.30 | 4.35 | |
| ICBC | A | 3.40 | 4.25 | 4.55 | 4.75 | 4.75 | 4.80 | 4.80 |
 |
A | 3.30 | 4.60 | 5.00 | 5.50 | 5.25 | 5.30 | 5.30 |
 |
BBB | 2.40 | 3.75 | 4.00 | 5.00 | 4.40 | 4.50 | 4.40 |
 |
A- | 2.50 | 3.75 | 4.10 | 5.00 | 5.00 | 5.00 | 5.00 |
Term deposit rates
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