A new 15 year high has been reached for term deposit offers.
Until recently, 6% for one year was the gold standard rate from a bank and after SBS Bank first reached that milestone in January this year, a number of challenger banks stepped up as well.
There has been some relatively minor rises from there by a few - Bank of China now offers 6.18%, and both Heartland and Kookmin Bank* have inched up to 6.1%.
These are good offers in the perspective that most analysts expect June CPI inflation to come in at 5.9% when the data is released on Wednesday, July 19, 2023.
But jumping out front we now have SBS Bank who have launched a 6.50% one year rate offer. It will be available from Saturday, July 15, 2023.
Term deposit savers haven't had an offer that high from any bank since November 21, 2008, nearly 15 years ago.
Another feature of the evolving term deposit rate structure is that 6% rates are shifting to some terms shorter than 12 months. Heartland Bank has a 6% rate for a nine month term. And the Bank of China offers 6.08% for nine months now, the top rate in New Zealand for that term. It is quite on the cards that some bank may offer 6% for 8, 7 or even 6 months soon. We have no inside information but it does seem possible at present.
The reason main bank 6-9 month rates are all very similar is that banks know that is where the money is. Kiwi savers are conservative and rarely go longer - new data from the RBNZ has been an eye-opener about how reluctant savers are to go for even a one year rate. Or even change from a main bank. It is each savers choice of course, but that leaves quite a bit of income avoided. (And don't forget, all banks are investment grade here.)
Among the challenger banks, it is the Bank of China that currently has the highest offers in the 6-9 month range.
The appetite for short rates may change of course if bank rate offers turn significantly higher than CPI inflation, as today's SBS Bank one does.
Adding to the landscape is that with HSBC withdrawing from retail banking, their retail clients will be looking for a new home for their savings.
One risk savers should watch is the cost of wholesale money and you can do that looking at swap rates. You can do that here. Earlier this week the one year swap almost touched 6.0% again. It did that first in May. We have had a long almost-3 year run up in background money costs. The OCR rises have been part of that. If this trend reverses for any reason, the pressure on rates to savers will ease making those who locked in longer rates look good. If it continues, taking shorter rates now may seem sensible, but only if you switch to longer ones when you think the recent rising trends are over.
Almost all banks are pricing longer rates lower than their one year offers, and perhaps that inversion is growing.
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.
* Kookmin Bank's 6.10% one year offer is for deposits of $100,000 and more. For a $10,000 minimum it is 6.00%.
The latest headline rate offers are in this table after the recent increases.
| for a $25,000 deposit July 15, 2023 |
Rating | 3/4 mths |
5 / 6 / 7 mths |
8 - 11 mths |
1 yr | 18mth | 2 yrs | 3 yrs |
| Main banks | ||||||||
| ANZ | AA- | 4.30 | 5.65 | 5.65 | 5.80 | 5.50 | 5.50 | 5.25 |
 |
AA- | 4.20 | 5.65 | 5.65 | 5.85 | 5.75 | 5.70 | 5.60 |
 |
AA- | 4.30 | 5.65 | 5.70 | 5.85 | 5.50 | 5.30 | 5.15 |
 |
A | 4.20 | 5.65 | 5.65 | 5.75 | 5.10 | 4.90 | |
 |
AA- | 4.30 | 5.65 | 5.65 | 5.80 | 5.40 | 5.30 | 5.20 |
| Other banks | ||||||||
| Bank of China | A | 4.70 | 5.88 | 6.08 | 6.18 | 5.80 | 5.50 | 5.30 |
| China Constr. Bank | A | 4.80 | 5.85 | 5.90 | 6.00 | 5.85 | 5.50 | 5.40 |
| Co-operative Bank | BBB | 4.20 | 5.65 | 5.65 | 5.85 | 5.65 | 5.60 | 5.50 |
| Heartland Bank | BBB | 4.00 | 5.90 | 6.00 | 6.10 | 5.35 | 5.30 | 5.30 |
| HSBC | AA- | 3.90 | ||||||
| ICBC | A | 4.70 | 5.65 | 5.90 | 5.90 | 5.70 | 5.35 | 5.30 |
| Kookmin Bank | A | 4.40 | 5.60 | 5.70 | 6.00* | 5.20 | 5.20 | |
 |
A | 4.60 | 5.85 | 5.90 | 6.00 | 5.85 | 5.40 | 5.40 |
 |
BBB | 3.90 | 5.50 | 5.40 | 6.50 | 5.35 | 5.35 | 5.35 |
 |
A- | 4.25 | 5.30 | 5.40 | 6.00 | 5.40 | 5.30 | 5.20 |
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.