It has been a month since we last looked at where term deposit rates have shifted to, and the news hasn't been good for savers in this period.
Almost all the main banks have been cutting fixed home loan rates, and matching those cuts with term deposit rate cuts at the same time. There has been a notable slide.
At least -20 bps has been trimmed across the board, sometimes more.
But some, like BNZ, Kiwibank and Rabobank are yet to move, so in this transition phase ahead of next week's OCR, there are opportunities to ameliorate the harshest of the cuts.
Update: BNZ has now moved and their new rates are in the table below.
For all the main banks and for all the main popular TD terms, these rates are now basically aligning as the same among all the big five, or within +/-5 bps - or will do before the OCR next week.
No main bank has any 4% rates for terms less than three years. Now some don't have any for any term.
Among the challenger banks, a 4% rate is now available at Rabobank, for a six month term. This offer may not last very much longer, but it is still there to be taken advantage of. Update: SBS has launched a six month 'special' at 4.35%, an unusually high rate in the circumstances.
Among community financial institutions, there is also only one who has a 4% rate, First Credit Union. But no others for terms less than three years.
The offers at 4% or better are still widely available among finance companies. And given that the ones listed below all have Depositor Compensation Scheme (DCS) protection to $100,000, the risks of considering these options are much less than they have been prior to July 1, 2025 when the DCS protection started.
Among those finance companies, there is even one with an investment grade credit rating, Liberty Financial currently at BBB, which is the same as two challenger banks.
We should also note that the practical risk-free benchmark of Kiwi Bonds, which are directly guaranteed by the Government (not through the DCS), has last had its rates reviewed on July 3, 2025. Since then the average bank six month TD rate has fallen -20 bps after these latest changes and the average bank 12 month TD rate has eased similarly. No one knows when the Kiwi Bond rates will be next reviewed, but they are unlikely to be increased when they do.
But when they are reviewed next, it is probably a good bet they will be cut by at least -0.25 bps, possibly even -50 bps. That is because over the same period from July 3, one year swap rates have fallen -60 bps!
Given that wholesale shift, you have to credit banks (or the competitive nature of banking) for only easing down their term deposit rates by ~20 bps over the same timeframe.
The risk is, however, that there is plenty of downside for term deposit rates at present. As low as rates are currently, savers may like to think about locking in current rates for longer periods (24 months?) to avoid what seems to be an horizon that looks ever lower. Certainly if the New Zealand economy's struggles extend, it is hard to see loan demand picking up requiring banks to raise more funding.
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 institutions 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 calculate your expected net after-tax returns.
The latest headline term deposit rate offers are in this table after the recent changes over the past three weeks. The pink background colour-code of 5%+ rates has now vanished. The yellow colour code for those under 4% and has spread comprehensively. Bolded rates are the "best-bank", the highest carded rate from any bank at this time.
This table only lists institutions covered by the Depositor Compensation Scheme. (This table is now updated with the SBS Bank 'special' included.)
| for a $25,000 deposit October 3, 2025 |
Rating | 3/4 mths |
5 / 6 / 7 mths |
8 - 11 mths |
1 yr | 18mth | 2 yrs | 3 yrs |
| Main banks | ||||||||
| ANZ | AA- | 3.20 | 3.55 | 3.50 | 3.45 | 3.50 | 3.55 | 3.75 |
 |
AA- | 3.20 | 3.55 | 3.45 | 3.45 | 3.50 | 3.55 | 3.75 |
 updated |
AA- | 3.20 | 3.60 | 3.50 | 3.50 | 3.55 | 3.60 | 3.85 |
 |
A | 3.35 | 3.75 | 3.70 | 3.65 | 3.80 | 4.00 | |
 |
AA- | 3.30 | 3.55 | 3.50 | 3.45 | 3.50 | 3.55 | 3.70 |
| Kiwi Bonds. 'risk-free' | AA+ | 3.00 | 3.00 | 3.25 | ||||
| Rating | 3/4 mths |
5 / 6 / 7 mths |
8 - 11 mths |
1 yr | 18mth | 2 yrs | 3 yrs | |
| Other banks | ||||||||
| Bank of China | A | 3.65 | 3.95 | 3.80 | 3.85 | 3.95 | 3.95 | 4.10 |
| China Constr. Bank | A | 2.85 | 3.20 | 3.20 | 3.20 | 3.25 | 3.25 | 3.55 |
| Co-operative Bank | BBB+ | 3.15 | 3.70 | 3.60 | 3.60 | 3.65 | 3.70 | 3.85 |
| Heartland Bank | BBB | 3.50 | 3.90 | 3.85 | 3.80 | 3.85 | 3.90 | 4.00 |
| ICBC | A | 3.55 | 3.90 | 3.80 | 3.85 | 3.80 | 3.90 | 4.05 |
 |
A | 3.50 | 4.00 | 3.85 | 3.90 | 3.90 | 3.85 | 4.00 |
 |
BBB | 3.40 | 4.35 | 3.70 | 3.75 | 3.75 | 3.75 | 4.00 |
 |
BBB+ | 3.35 | 3.75 | 3.70 | 3.70 | 3.80 | 3.80 | 4.00 |
| Non-Bank Deposit Takers | Rating | 3/4 mths |
5 / 6 / 7 mths |
8 - 11 mths |
1 yr | 18mth | 2 yrs | 3 yrs |
| Community institutions with DCS protection | ||||||||
| First Credit Union | BB | 3.75 | 4.00 | 3.90 | 3.90 | 3.80 | 3.80 | |
| Heretaunga Bldg Society | 3.40 | 3.90 | 3.80 | 3.90 | ||||
| Nelson Building Society | BB+ | 2.95 | 3.50 | 3.45 | 3.45 | 3.70 | 3.50 | 4.00 |
| Police Credit Union | BB+ | 3.35 | 3.75 | 3.70 | 3.70 | 3.80 | 3.90 | |
| UnityMoney | BB | 3.25 | 3.60 | 3.55 | 3.50 | 3.50 | 3.45 | 3.45 |
| Wairarapa Bldg Society | BB+ | 3.50 | 3.80 | 3.80 | 3.85 | 3.80 | 3.80 | |
| Finance companies with DCS protection | ||||||||
| Christian Savings | BB+ | 3.35 | 3.85 | 3.80 | 3.80 | 3.85 | 3.90 | 4.15 |
| Finance Direct | 3.25 | 3.80 | 4.00 | 4.15 | 3.85 | |||
| General Finance | BB | 3.80 | 4.05 | 4.15 | 4.30 | 4.30 | 4.15 | 4.15 |
| Gold Band Finance | BB- | 2.75 | 2.75 | 4.00 | 4.00 | 4.05 | 4.20 | |
| Liberty Financial | BBB | 3.45 | 4.20 | 4.25 | 4.40 | 4.40 | 4.35 | 4.30 |
| Mutual Credit Finance | B+ | 4.00 | 4.00 | 4.10 | 4.50 | |||
| Xceda Finance | B+ | 4.20 | 4.25 | 4.35 | 4.40 | 4.25 | 4.15 | |
Term deposit rates
Select chart tabs
Daily swap rates
Select chart tabs
Term deposit calculator
20 Comments
Its grim out there for savers, the glory days of 6% TDs are a distant memory...
You can see from the action on the NZX that investors are out there looking for higher yielding alternatives.
So how's that wealth effect from lower interest rates work again?
As a worker bee with a mortgage its great thanks for asking.
SAY Thankyou
When interest rates were hiked high to crash the economy (and lead to lower interest rates), why not lock in for 5 years? It was obvious to anyone with half a brain that rates were going to come down.
Imagine how much the face value of a long dated bank corporate bond would have increased if it have been purchased instead of a term deposit at high OCR point
They may be less sheep in NZ but some sheep are being more fleeced then overs
They have gone on pretty well. I bought Airport, Bank and Utility bonds when things were crazy they haven’t come down as much as the cash rate cause the curve was inverse then and is now quite steep but they are 2-3 year bonds now so still better than TD’s for sure
I think the highest par value is about 104
2050 NZ Government Index Linked Bonds yield 3.10% plus CPI so if CPI averages 2.50% you received equivalent 5.60% yield. Great inflation hedge.
2050 NZ Government Index Linked Bonds yield 3.10% plus CPI so if CPI averages 2.50% you received equivalent 5.60% yield. Great inflation hedge.
Only if you believe that the yield >= inflation. Which it's likely not.
The yield (3.10%) is the real yield. Then you get the CPI component as a coupon on top so yes it does beat inflation. The only way it falls behind is if the basket that measures CPI doesn’t reflect your living expenses which is more likely than not. That said it’s still a pretty good hedge. Better than nominal bonds
and if you believe like me that inflation is likely to be tough to obliterate in NZ over the next decade or so then your CPI component makes sure you get an even better coupon.
Then you get the CPI component as a coupon on top so yes it does beat inflation
So you're saying that the CPI is inflation, right? I don't agree. Inflation as multifaceted - covering monetary inflation (money supply growth), consumer price inflation (cost of goods/services rising), and asset price inflation (asset valuations increasing).
ShadowStats claims that if inflation were still calculated using pre-1980s govt methodologies, the reported annual rate would be 6-8 percentage points higher than the official CPI, which often lands near or above 10% in recent years.
What I’m saying is in an investment portfolio it’s a good product to have within that diversification. As a hedge against inflation it works better than nominal bonds. If there was a multi faceted measure of inflation that was used to provide a top up to the real coupon that would be great but I doubt we will be adopting that idea in the near term. Would probably be a project for Central Banks to visit as monetary policy is based around “CPI”.
In answering your query about what I think is inflation I wasn’t really planning on going into a discussion about that. It’s something that probably needs a complex dynamic system to properly measure.
Debasement alone of USD via M2 inflation is running at nearly 7% per year. Always good to keep this in perspective.
You would think high dividend earning shares would be good to buy in a low interest environment. I put a small sum into a high dividend ETF which immediately plummeted in price. This was when interest rates were like 1%. Only recently have I been able to get back to a small profit and that was with the help of earning dividends. I see they appear to have gone up 14% while also earning dividends over the last twelve months however they are still more than 10% below what I bought them for.
Smartshares NZ Dividend ETF - a 1-year total return of approx 11.7% as of Aug, including reinvested dividends. P5Y, average annual return has been around 6.5–7.1%.
What if you bought at the very beginning of 2021?
About 4.5% annualized. For comparative purposes, gold at 16.2% pa over same time period.
Curious, I bought early 2021 at 1.399 and now they are worth 1.304. I have a simple return, which includes dividends, of +1.59% for the entire period. At least it outperformed property!
Scaling in is possibly a better approach. I also own DIV and allocate monthly.
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.