We are starting to see some rises in term deposit rates. The latest is by BNZ which raised six month and one year offers, but cut longer term offers.
They aren't the first to do that in this current cycle. On Thursday Westpac did the same - but ANZ didn't.
So it's worth reviewing where that leaves the relative positioning of these term deposit offers between banks - and some key non-banks.
This week's rises have been relatively modest, certainly compared to the latest Official Cash Rate (OCR) rise of 50 basis points. True, some bonus saver accounts have risen by 50 bps, but for term deposits the rises are 25 bps at most and most are less than that.
And here is an update of our March review of where the key rates from the main banks sit relative to the OCR after the April 5, OCR rate rise.
Basically the recent few increases have not been enough to even arrest the slide, let alone improve the position of savers compared to the OCR benchmark.
So savers may be better off looking at challenger banks for enhanced returns at a time of high inflation and the rising OCR.
Apart from the 6% offers from Heartland Bank and Rabobank, Liberty Financial, which has an investment-grade credit rating, offers 7% for a one year term. (Xceda's 6.50% for six months is notable too, but they do not have an investment-grade credit rating).
Since we reviewed term deposit rate levels in February, there has been relatively little movement in these rates following both the February 50 bps and April 50 bps OCR increases, 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 Governor Adrian Orr 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 more than 100 bps higher (that is 6.00% or so) and the one year term deposit offer 120 bps higher, so about 6.70%.
Some challenger banks are offering broadly fairer rates with Heartland and Rabobank both with 6% one year TD rates in the market, SBS Bank has long ended theirs, although you might argue that even these could be at the 7% level if main banks were offering a more 'normal' 6.5%.
We should also note that the Treasury hasn't yet increased its Kiwi Bond rates, which currently sit at 3.75% for six months and 4.25% for one year.
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 Reserve Bank data.
Low bank term deposit offers do 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 April 14, 2023 |
Rating | 3/4 mths |
5 / 6 / 7 mths |
8 - 11 mths |
1 yr | 18mth | 2 yrs | 3 yrs |
| Main banks | ||||||||
| ANZ | AA- | 4.05 | 5.20 | 5.35 | 5.70 | 5.35 | 5.20 | 5.10 |
 |
AA- | 3.80 | 5.00 | 5.25 | 5.50 | 5.30 | 5.30 | 5.30 |
 |
AA- | 3.80 | 5.10 | 5.25 | 5.60 | 5.30 | 5.30 | 5.20 |
 |
A | 3.80 | 5.00 | 5.25 | 5.40 | 5.25 | 5.25 | |
 |
AA- | 4.10 | 5.20 | 5.40 | 5.70 | 5.40 | 5.30 | 5.20 |
| Other banks | ||||||||
| Bank of China | A | 4.30 | 5.40 | 5.75 | 5.85 | 5.45 | 5.40 | 5.40 |
| China Constr. Bank | A | 4.40 | 5.50 | 5.75 | 5.85 | 5.55 | 5.45 | 5.45 |
| Co-operative Bank | BBB | 3.80 | 5.10 | 5.20 | 5.55 | 5.35 | 5.30 | 5.30 |
| Heartland Bank | BBB | 4.00 | 5.50 | 5.80 | 6.00 | 5.35 | 5.30 | 5.30 |
| HSBC | AA- | 4.30 | 5.40 | 5.65 | 5.30 | 5.15 | 5.10 | 5.00 |
| ICBC | A | 4.40 | 5.50 | 5.75 | 5.85 | 5.55 | 5.45 | 5.45 |
 |
A | 4.40 | 5.60 | 5.90 | 6.00 | 5.85 | 5.40 | 5.40 |
 |
BBB | 3.70 | 4.80 | 5.20 | 5.35 | 5.25 | 5.25 | 5.25 |
 |
A- | 4.10 | 5.20 | 5.40 | 5.50 | 5.30 | 5.30 | 5.30 |
Term deposit rates
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