Banks are keen to let you know that they are dropping home loan rates, and both ASB and ICBC are the latest to move those.
But they are also shifting down their term deposit rates rather aggressively as well.
And we are starting to see a steepening in the carded rate curves, a bull steepening. (A bull steepening is when the shorter rates fall faster than the longer rates.)
In the shadow of the Easter weekend break, banks are rolling out these changes in the hope fewer savers will notice while they are diverted by their holiday activities, and that when 'normal service' returns after the ANZAC Day holiday these new levels will be just 'historical'. In any event, these are tough moves for savers because inflation is elevated.
Over the past two days we have had rate reductions reported by ANZ, ASB, BNZ, Kiwibank and Westpac, as well as from AMP, Bank of China, the Cooperative Bank, Rabobank, SBS and ICBC.
Non-bank financial institutions haven't moved much yet, and that presents an interesting arbitrage opportunity for savers, especially now their offers are about to become 'guaranteed' by the DCS which kicks in in just over 70 days.
With CPI inflation now reported at 2.5%, this is how it looks after-tax, after-inflation. The example is for a 4.00% six month rate, interest at maturity. The six month term is what most savers choose. It is pretty clear that even this level won't last much longer.
| Advertised rate |
Tax rate |
CPI inflation |
Net real yield |
| % | % | % | % |
| 4.00 | 10.5 | 2.5 | +1.08 |
| 4.00 | 17.5 | 2.5 | +0.80 |
| 4.00 | 30.0 | 2.5 | +0.30 |
| 4.00 | 33.0 | 2.5 | +0.18 |
| 4.00 | 39.0 | 2.5 | - 0.06 |
So yes 'positive' returns are still available after-tax and after-inflation for all savers other than those on the top tax rate. But they are almost irrelevant no matter how you look at them. Enthusiasm for term deposit savings will now undoubtedly wane.
Higher rates are now more common at the longer end of the rate offer cards.
When you invest, always check how interest is compounded. Depending on how much you are committing, compounding more often is materially better. But some banks advertise their "interest at maturity" rates different to their compounding rates, which for some can be set a little lower. Both Kiwibank and Rabobank do this, although most other main banks don't.
Use the calculator at the foot of this article to see the differences.
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). But in this environment don't get your hopes up for a positive response. Carded rates are likely to now be the 'best rate', except in quite special circumstances.
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 changes over the past month. The pink background colour-code indicates 5%+ rates still available. The yellow colour code for those under 4%. Bolded rates are the "best-bank", the highest carded rate from any bank at this time.
| for a $25,000 deposit April 17, 2025 |
Rating | 3/4 mths |
5 / 6 / 7 mths |
8 - 11 mths |
1 yr | 18mth | 2 yrs | 3 yrs |
| Main banks | ||||||||
| ANZ | AA- | 3.65 | 4.05 | 3.95 | 3.90 | 3.90 | 4.00 | 4.05 |
 |
AA- | 3.70 | 4.00 | 3.95 | 3.90 | 3.95 | 3.90 | 4.05 |
 |
AA- | 3.70 | 4.00 | 3.95 | 4.00 | 4.00 | 4.00 | 4.05 |
 |
A | 3.70 | 4.10 | 4.00 | 4.00 | 4.00 | 4.00 | |
 |
AA- | 3.65 | 4.00 | 4.10 | 3.90 | 3.90 | 4.00 | 4.10 |
| Kiwi Bonds. 'risk-free' | AA+ | 3.50 | 3.50 | 3.50 | ||||
| Rating | 3/4 mths |
5 / 6 / 7 mths |
8 - 11 mths |
1 yr | 18mth | 2 yrs | 3 yrs | |
| Other banks | ||||||||
| Bank of China | A | 4.00 | 4.25 | 4.10 | 4.05 | 4.05 | 4.05 | 4.15 |
| China Constr. Bank | A | 3.85 | 4.25 | 4.20 | 4.20 | 4.20 | 4.20 | 4.20 |
| Co-operative Bank | BBB+ | 3.55 | 4.10 | 4.05 | 4.05 | 4.00 | 4.00 | 4.10 |
| Heartland Bank | BBB | 3.80 | 4.30 | 4.20 | 4.15 | 4.15 | 4.15 | 4.25 |
| ICBC | A | 3.90 | 4.30 | 4.25 | 4.15 | 4.15 | 4.20 | 4.25 |
 |
A | 3.80 | 4.15 | 4.10 | 4.05 | 4.10 | 4.05 | 4.15 |
 |
BBB | 4.00 | 4.20 | 4.30 | 4.20 | 4.20 | 4.20 | 4.20 |
 |
BBB+ | 3.90 | 4.30 | 4.30 | 4.20 | 4.20 | 4.10 | 4.20 |
| Non-Bank Deposit Takers | Rating | 3/4 mths |
5 / 6 / 7 mths |
8 - 11 mths |
1 yr | 18mth | 2 yrs | 3 yrs |
| Community institutions | ||||||||
| First Credit Union | BB | 4.00 | 4.25 | 4.25 | 4.25 | 4.15 | 4.15 | |
| Heretaunga Bldg Society | 3.90 | 4.35 | 4.30 | 4.25 | ||||
| Nelson Building Society | BB+ | 3.40 | 3.85 | 3.85 | 3.80 | 3.80 | 3.70 | 3.70 |
| Police Credit Union | BB+ | 3.90 | 4.20 | 4.25 | 4.15 | 4.10 | 4.05 | |
| UnityMoney | BB | 3.80 | 4.00 | 3.90 | 3.85 | 4.10 | 4.05 | 4.15 |
| Wairarapa Bldg Society | BB+ | 4.00 | 4.30 | 4.30 | 4.30 | 4.20 | 4.20 | |
| Finance companies | ||||||||
| Christian Savings | BB+ | 4.00 | 4.45 | 4.40 | 4.35 | 4.30 | 4.30 | 4.45 |
| Finance Direct | 3.95 | 5.35 | 5.85 | 5.55 | 5.15 | |||
| General Finance | BB | 4.10 | 5.25 | 5.40 | 5.50 | 5.25 | 5.00 | 4.40 |
| Gold Band Finance | BB- | 3.75 | 3.75 | 6.40 | 6.20 | 5.75 | 5.75 | |
| Liberty Financial | BBB | 3.95 | 5.15 | 5.15 | 5.20 | 4.80 | 4.80 | 4.70 |
| Mutual Credit Finance | B+ | 6.00 | 6.00 | 5.95 | 5.75 | |||
| Xceda Finance | B+ | 6.00 | 5.80 | 5.70 | 5.60 | 5.50 | 5.00 |
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