Savers who use the Treasury's Kiwi Bond offers will want to know they cut the interest rate on them on Thursday (today), the fourth reduction in 2025. The previous reduction was in July.
They have taken -50 bps off each of the four rate terms they offer
Treasury (or more precisely, the Debt Management Office of Treasury) last set these rates on July 3, 2025.
For subscriptions of $1,000 - $500,000 they are now at:
| Maturity | change | Rate |
| 6 months | -50 bps | 2.50 percent per annum |
| 12 months | -50 bps | 2.50 percent per annum |
| 2 years | -50 bps | 2.75 percent per annum |
| 4 years | -50 bps | 3.25 percent per annum |
The official announcement is here.
Savers who value these direct government-guaranteed term deposits now have to put up with after-tax rates that are lower than Consumers Price Index inflation. We will get the Q3 CPI update on Monday and most analysts expect it to come in at 3%. The new lower 2.50% Kiwi Bond one year offer translates to 2.06% for taxpayers on a 17.5% marginal tax rate, to 1.75% for taxpayers on the 30% tax rate, to 1.68% on the 33% tax rate, and just 1.53% for those on the top 39% tax rate. Basically there are now no 'real' tax-paid returns when you save via Kiwi Bonds.
With the Depositor Compensation Scheme now in place, banks and other authorised deposit-taking institutions are where you have to look to to get a positive 'real' return. However, those still wanting risk-free returns for amounts above $100,000, Kiwi Bonds will remain an option, for gilt-edged protection at least.
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