Both ANZ and ASB on Thursday raised their term deposit offers. These come after BNZ and Westpac did the same earlier.
But since we last reviewed term deposit rate levels in February, there has been relatively little movement in these rates following the February 50 basis points Official Cash Rate increase, and the Reserve Bank Governor's pointed remarks that banks should be passing on these rises to savers.
They are still dragging the chain.
The above chart is after this latest round of term deposit rate rises. They haven't reversed the downward trend the Governor was calling out. Since the low point in August, the main banks haven't improved their offers any more than the minimum OCR rate change, locking in the long gradual decline that started way back in 2015.
If the premium to the OCR was now the same as it was just at the start of 2022, then today's six month main bank offer should be about +50 bps higher (that is 5.50% or so) and the one year term deposit offer +70 bps higher, so about 6.20%.
Challenger banks are offering broadly fair rates with Heartland and Rabobank both with 6% one year TD rates in the market, SBS Bank has ended theirs, although you might argue that even these could be at the 6.5% level if main banks were offering a more 'normal' 6.2%.
The banks will say that the lending situation does not justify higher rates. The loan demand is not there. No doubt they will be right when they look at the very large home loan market. But business demand is strong and rising according to RBNZ data (C5).
Low bank term deposit offers does encourage savers to shift funds to the corporate bond market where yields on offer are well over 6% for investment grade bonds. Still this is a place most savers don't want to go. They like the short stuff. Perhaps until savers learn how to access the bond market, bank low-balling will stay.
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, especially if you are in the 39% tax bracket - PIEs are taxed at 28% flat.
The latest headline rate offers are in this table after the recent increases.
| for a $25,000 deposit March 16, 2023 |
Rating | 3/4 mths |
5 / 6 / 7 mths |
8 - 11 mths |
1 yr | 18mth | 2 yrs | 3 yrs |
| Main banks | ||||||||
| ANZ | AA- | 3.80 | 5.00 | 5.25 | 5.50 | 5.25 | 5.20 | 5.10 |
 |
AA- | 3.80 | 5.00 | 5.25 | 5.50 | 5.30 | 5.30 | 5.30 |
 |
AA- | 3.80 | 5.00 | 5.25 | 5.50 | 5.30 | 5.30 | 5.30 |
 |
A | 3.80 | 5.00 | 5.10 | 5.40 | 5.25 | 5.25 | |
 |
AA- | 3.80 | 4.80 | 5.20 | 5.50 | 5.30 | 5.30 | 5.30 |
| Other banks | ||||||||
| China Constr. Bank | A | 4.40 | 5.30 | 5.70 | 5.80 | 5.55 | 5.35 | 5.35 |
| Co-operative Bank | BBB | 3.80 | 5.10 | 5.20 | 5.55 | 5.35 | 5.30 | 5.30 |
| Heartland Bank | BBB | 3.90 | 5.30 | 5.80 | 6.00 | 5.25 | 5.25 | 5.25 |
| HSBC | AA- | 3.70 | 4.75 | 5.10 | 5.30 | 5.15 | 5.10 | 5.00 |
| ICBC | A | 4.20 | 5.10 | 5.50 | 5.75 | 5.40 | 5.35 | 5.30 |
 |
A | 4.20 | 5.30 | 5.75 | 6.00 | 5.85 | 5.40 | 5.40 |
 |
BBB | 3.70 | 4.80 | 5.20 | 5.35 | 5.25 | 5.25 | 5.25 |
 |
A- | 4.00 | 5.00 | 5.15 | 5.40 | 5.20 | 5.25 | 5.25 |
Term deposit rates
Select chart tabs
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.