Today is the final day that AMP will be offering its premium over Heartland Bank term deposit rates.
That premium is +10 bps.
It means that the expiring AMP offer is for 6.35% for a six and nine month term. Links to that offer are in our term deposit tables (click on the logo).
All AMP's "launch specials" will fall back to equivalent Heartland Bank rates at the close of business today.
While we are talking about 'specials', BNZ also has one, its 6.15% pa rate for a six month term deposit. That expires soon too, on Wednesday, July 17, 2024.
Recent financial market moves following the latest RBNZ monetary policy signals mean that it is highly likely that these rates represent the high-water mark for term deposit offers. That view will either be confirmed, or changed, when the CPI rate for the June quarter is released next week on Wednesday, July 17, 2024.
This will be pivotal in determining when the RBNZ actually cuts rates.
Financial markets have priced in a 50/50 chance of a -25 bps rate cut at the August 14, 2024 meeting. They have a full -25 bps cut priced in from today for the October 9 RBNZ review. And they have another fully priced in for the November 9, 2024 meeting.
But financial market pricing is fickle, responding easily to economic and regulatory signals. Before this week's RBNZ MPR, it saw nothing like such an aggressive cutting schedule. So we should expect different market pricing if the June CPI data surprises.
In March, the CPI ran at 4.0%. The RBNZ is on record in its assumptions as picking a June drop to 3.6%. Bank economists vary but their range sees a June rate down to possibly as low as 3.3%. A Massey 'live' inflation tracker suggests the range for June is quite wide. Check back later when we will have a full review of all these views.
The point is, hardly anyone thinks June inflation will rise from March - or even stay little-changed. But a surprise like that would be a real market-mover.
The balance of risk at this point is that term deposit rates at 6% or more from almost any bank for any term are likely to fade away quickly by the end of the month, possibly even by the end of next week.
And there is another powerful reason term deposit rate offers might fall quickly soon - a lack of loan demand. Banks compete for funding to support their lending activities. But if loan demand stays weak or even weakens, there is no good commercial purpose by banks to promote deposit activity or win more share. In fact, if loan portfolios backslide the incentive will be to let their deposit books shrink in unison. "Attractive rates" would then disappear, probably across the board.
We should also point out that after-tax returns can be enhanced for some savers with higher tax rates, by the choice of PIE structures. Not all banks offer these, but most of the main banks do. For a nine month bank offer, they can be boosted by about ~30 basis points going this way. In some cases that will make up any difference, or more.
Always ask a bank for a better rate. Many bank staff have discretion to offer more than the advertised rate. (And check your bank's app offers as they too are often enhanced to retain you).
Use the term deposit calculator here, or the one below the table, to calculator your expected net returns.
The latest headline term deposit rate offers are in this table after the recent increases.
| for a $25,000 deposit July 12, 2024 |
Rating | 3/4 mths |
5 / 6 / 7 mths |
8 - 11 mths |
1 yr | 18mth | 2 yrs | 3 yrs |
| Main banks | ||||||||
| ANZ | AA- | 4.30 | 5.90 | 6.00 | 5.90 | 5.90 | 5.65 | 5.30 |
 |
AA- | 4.40 | 5.90 | 6.00 | 5.90 | 5.70 | 5.40 | 5.20 |
 |
AA- | 4.30 | 6.15 | 6.00 | 5.90 | 5.85 | 5.60 | 5.25 |
 |
A | 5.00 +0.50 |
6.05 | 6.00 | 5.90 | 5.60 | 5.25 | |
 |
AA- | 4.30 | 5.80 -0.10 |
6.00 -0.05 |
5.80 -0.10 |
5.70 -0.10 |
5.50 | 5.30 |
| Other banks | ||||||||
| Bank of China | A | 5.50 | 6.20 | 6.20 | 6.15 | 5.95 | 5.70 | 5.35 |
| China Constr. Bank | A | 5.50 | 5.80 | 5.90 | 6.00 | 5.85 | 5.65 | 5.40 |
| Co-operative Bank | BBB | 4.30 | 6.05 | 6.00 | 6.00 | 5.80 | 5.70 | 5.35 |
| Heartland Bank | BBB | 5.50 | 6.25 | 6.25 | 6.20 | 6.00 | 5.90 | 5.80 |
| ICBC | A | 5.40 | 6.15 | 6.15 | 6.20 | 5.95 | 5.70 | 5.40 |
| Kookmin Bank | A | 4.40 | 5.60 | 5.70 | 6.00 | 5.00 | 4.60 | |
 |
A | 5.05 | 6.15 | 6.20 | 6.30 | 6.10 | 5.90 -0.20 |
5.60 -0.30 |
 |
BBB | 4.20 | 6.05 -0.05 |
6.05 -0.10 |
5.95 -0.10 |
5.80 | 5.50 | 5.30 |
 |
A- | 4.25 | 5.90 | 5.90 | 5.90 | 5.80 | 5.50 | 5.30 |
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