BNZ and SBS Bank trim some rates for terms one year and longer. Kiwibank raises its 200 day 'special offer' rate. These changes come as wholesale interest rates shift sharply lower

It is nervous times for term deposit investors.

Wholesale swap rates have dived in the past week, and that implies that banks will be resetting term deposit offer rates lower at some stage. After all, why offer retail investors more than what can be raised 'efficiently' at scale in wholesale markets?

In the past few days, three banks have changed rates.

Firstly, Kiwibank has raised its 200 day 'special offer' from 3.25% to 3.40%, a +15 basis points rise.

This has resulted in an attractive rate for the large pool of funds invested in the six-to-nine month duration period. Only Heartland Bank has a higher offer than Kiwibank (3.45%). Rates at this level for this term are mostly -10 to -15 basis points lower from all other bank offerors.

But Kiwibank's move has proven to be unusual.

BNZ has today (Tuesday) trimmed all its term deposit offer rates for terms of one year to five years by -5 to -15 basis points.

BNZ's changes are either very brave (?) or a signal of what is about to come from their main rivals. From durations of eighteen months, BNZ is offering rates -10 to -15 basis points below their main rivals. For durations of two years, the underbid is -20 basis points from the equivalent ASB offer.

And SBS Bank has also trimmed its offers of eighteen months and longer rates also by -5 to -15 basis points.

This change means there are now no bank offers of 4% or more for any term of three years or less; SBS Bank was the last to offer them, and this is no more.

PIE rates can give a small boost to pre-tax return equivalents.

Meanwhile, over the past two weeks, wholesale swap rates have shifted sharply lower. One year swap rates are down -5 basis points, two year rates are down -13 basis points, and three year rates are down -18 basis points. In the world of wholesale swap rates, these are big, fast movements, ones bank treasurers will have noticed.

Using our deposit calculator to figure exactly how much benefit each option is worth you can assess the value of more or less frequent interest payment terms, and the PIE products, comparing two situations side by side.

All carded, or advertised, term deposit rates for all financial institutions for terms of less than one year are here, and for terms of one-to-five years are here.

Term PIE rates are here.

The latest headline rate offers are in this table. 

for a $25,000 deposit Rating 3/4 mths 5/6/7 mths 8/9 mths 1 yr 18 mths 2 yrs 3 yrs
Main banks                
AA- 3.00 3.25 3.45 3.40 3.55 3.65 3.80
ASB AA- 3.00 3.25 3.45 3.50 3.60 3.70 3.80
AA- 2.90 3.25 3.25 3.40 3.45 3.50 3.65
Kiwibank A 3.00 3.40 3.35 3.45   3.65 3.80
Westpac AA- 2.95 3.25 3.35 3.45 3.55 3.65 3.80
Other banks                
BBB 2.95 3.25 3.35 3.40 3.50 3.60 3.70
Heartland Bank BBB 3.10 3.45 3.60 3.60 3.70 3.80 3.85
HSBC Premier AA- 2.60 2.90 2.90 2.90   2.90 3.00
ICBC A 2.95 3.25 3.55 3.35 3.75 3.85 3.95
RaboDirect A 2.80 3.30 3.30 3.35 3.65 3.80 3.90
RaboDirect BBB 3.00 3.30 3.40 3.45 3.60 3.70 3.90
A- 3.00 3.15 3.20 3.25 3.50 3.65 3.90
Selected fincos                
Liberty Finance BBB- 3.60 3.95 4.25 4.30 4.35 4.40 4.45
UDC BBB 2.85 3.35 3.50 3.60 3.60 3.75 3.75

Rates in this table are the highest offered by each institution for the terms listed. You however will need to check how often interest is credited or paid. That important factor is not filtered in the above table and rates with various interest payment/credit arrangements are mixed here. However, our full tables do disclose the offer basis.

Our unique term deposit calculator can help quantify what each offer will net you.

Term deposit rates

Select chart tabs »
The '1 year %' chart will be drawn here.
Loading...
(bank averages)
The '30 days %' chart will be drawn here.
Loading...
(bank averages)
The '90 days %' chart will be drawn here.
Loading...
(bank averages)
The '6 months %' chart will be drawn here.
Loading...
(bank averages)
The '2 years %' chart will be drawn here.
Loading...
(bank averages)
The '3 years %' chart will be drawn here.
Loading...
(bank averages)
The '4 years %' chart will be drawn here.
Loading...
(bank averages)
The ' 5 years %' chart will be drawn here.
Loading...
(bank averages)

We welcome your help to improve our coverage of this issue. Any examples or experiences to relate? Any links to other news, data or research to shed more light on this? Any insight or views on what might happen next or what should happen next? Any errors to correct?

We welcome your comments below. If you are not already registered, please register to comment or click on the "Register" link below a 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.

35 Comments

This is a great pity for those on limited incomes (such as retired people) who rely on term deposit returns to boost their living standards.

TTP

You're right. Someone like me from a lower working class background should throw my life savings into speculative property investment. I mean, I have nowhere to fall back to if it fails, my own mother couldn't give me a room to sleep in if it all went downhill, but still - indefinite capital gains are an iron clad law of physics.

If everybody buys a house and a rental then we can all be landlords.

I thought the rule of thumb was five rentals. You're supposed to sell the fifth when you retire so as to have zero debt, and passive inflation adjusted income into retirement.

Oh my bad. Everyone should go out and buy 5 rentals. I mean everyone.

And list them all on AirBnB. Rolling in it!!

There's no shortage of Boomers whos supplemented retirement resides in one basket - property. What happens when it all starts to unwind?

Today, as smarter Boomers reflect on the current lofty valuations they quickly visualize a future offering less guarantees they will be able to liquidate with financial dignity. Then theres the anxiety issues to deal with. This is not only a pity, its soul destroying. I can see a society filled with many unwilling and disillusioned speculords reflecting thinking "if only I had the hassle free term deposit instead"

(•◡•) ..... ^ ^

RP, if property market seriously crash, then banks will go under too. Banks going under means that they wont be able to honer their own debt, i.e. bank customers' deposit will suffer. After all, people who deposit money in a bank, are partially lending the money to home-owners and property investors. I am not suggesting that investing in property is risk-free or safe, just that if there is a real crash in property sector (not 10-20 or even 30% drop in value from the pick prices) the whole economy will tank meaning that all investments will be in serious risk. In such event, very few may prosper but there will be no where to hide for the majority of people even if they had never invested a single dollar in real estate.
NZ problem is it really does not offer any serious value propositions to attract investment. Farming is peaked with additional investment unlikely to have a positive return, there are no prospect for manufacturing, the service industry is already struggling. Whit to no real attractive business ideas that are conventional enough to attract investors, is there really surprising that all the extra credit flooding NZ simply finds its way to inflate house prices?

Hi Believer1980,

You make some very valid points.

To take it a step further: Under a worst-case scenario of the economy "tanking" (as you describe) and the banks failing - forcing their depositors to take "haircuts" - then I'd much sooner have my capital tied up in property than in bank deposits.

That's because you'll never recoup your bank deposit funds following a "haircut". Your money is gone forever. But with real/tangible assets such as property, then as the economy recovers so to will the property market (and house prices). That process might take a good while but all you have to do is wait........ That's better than grieving about the banks having lost a chunk of your money forever.

TTP

TTP, I think you've conveniently misunderstood me. I would never knock owner occupier home ownership. Owning your own property is a good thing provided the process doesn't cause distress. If like myself, someone has already paid off their property, rather than sinking further funds into the same commodity, build a cash buffer by way of term deposits. One should aim to be free of debt in these uncertain times.

Making todays speculators rich is only a pathway for fools.

Well, it is not a pathway for fools RP..... many people would argue that you are the one who is on the wrong pathway of prosperity ...

the fact that you chose to end your productive life and seccum to a lazy retirement and live on crumbs does NOT make you a genius or make others fools !!

I am not sure what to make of your sick opinions, are you a risk averse person and only like to be debt free and bragg about it ?
or are you just dead jealous of those who are not afraid of debt and prepared to take risk and advance in life?

" Making todays speculators rich is only a pathway for fools "

Why are you calling them fools when you don't know what they are doing and you don't want to enjoy their returns ? .. you must be a Dark person green with envy then, let alone extremely shameless !!

Where is the point in running around everyday like a village idiot calling for the sky to fall and describing a legitimate successful investment path, proven for years, a " pathway for fools" ?

Keep calling for doomsdays and dark clouds, Keep humiliating yourself RP - you are just a bully with a lot of time on his hand provoking people in subjects you have absolutely No knowledge about and no guts to get into, gathering similar ill-informed or biased people around you to cheer you up.!!

I like to expose you for what you are every now and then as nothing you have contributed thus far holds any water or even gets close to reality.

Eco Bird, all you needed to say is that you don't agree with my view :) Feeling better now?

Woe what BEE STUNG YOU Eco Bird.

Eco Bird(brain).

Your post is just full of bitter,twisted rubbish and i am surprised that it has not been removed.by the way,'seccum' is unknown to the English language-it is actually succumb-,but how were you expected to know that?

RP hells bells term deposits really even investing in companies like Contact or Spark you get twice the return of TD's ??? Even Milford Asset Management has returned me 9%/annum over the last 3 years TD's are for really old scared people !

Shoreman, even I could resort to some rear vision cherry picking, but I don't. Excellent returns BTW :)

Most boomers have built up their property portfolios over years/decades. Some started in the days of pounds/shillings/pence........

They are sitting pretty now - especially given NZ's rapidly rising population and shortage of houses.

TTP

TTP, granted there is probably an element of truth to your statement, its only because it's hard to prove otherwise. Who on earth are the 10% who owe 40% of the housing debt? This group are putting the whole lot at risk. It's easy to know who did the lending but, what are the age spread of the borrowers?

Thankfully, as opposed to the Australian parents, NZ banks are currently sourcing 70+ percent of deposits locally. Currently, it's hard to argue against the current faith in bank deposits ;-)

"Who on earth are the 10% who owe 40% of the housing debt?"

Answer: The 10% of wealthiest people in NZ who own multiple commercial and residential properties. They generally have a gearing less than 50% so they are not overexposed to a downturn.

Yvil, that's incredibly reassuring. Why did you previously comment that you were eliminating debt and reducing exposure to property? Was it your belief that another Asian financial crisis is imminent or is it that we are on a slow spiral to another depression. You did make these very comments.

"So be brave and let the great depression happen, it's the purge the whole system needed. It's much better than the long slow downward spiral we're on now, which will still lead to a depression"

Are you suddenly misinformed or just a convenient hypocrite?

Most boomers have built up their property portfolios over years/decades.

No, Most boomers have paid off the familly home years ago.. The vast majority don't have a property portfolio.. they have a home.

Plenty own more than one property.

Over years/decades, they have adopted an astute/strategic approach to property investment.

In their senior years, this allows them more choice.

TTP

got numbers to back up your assertion? I'm still saying the vast majority ie >50% don't until I see evidence otherwise.

I think you are rather envious.

TTP

And I think you're a plonker.

PS: couldn't give a flying fig what you think of me, I don't yearn for your approval. :)

TTP, ooooh so quick with the labelling. You now appear embarrassed and cant substantiate another one of your loose unthought comments. Why can't you just answer Pragmatists question? Keep it simple buddy!

Asset rich , cash poor.

Hi BadRobot,

Many seniors who own more than one property are actually debt free - having made sure to extinguish any mortgages/debt prior to retirement.......

If/when they become "cash poor" they still have the option of liquidating a property - which will usually provide a very useful supplement to their pension plus any other income. (The median house price in NZ is around $560,000.)

That's a nice position to be in - enough to make me envious. But it typically comes about through prudent investment planning over many years.

TTP

Asset rich, cash poor,

That statement is very true unless you bought property when interest rates were around 8.5% and then fell to around 4.5%

The reality is that while many on here bemoan the property investors for owning many properties, it plays into the hands of the successful investors.
We currently have a new generation coming through that think that they can get ahead without doing anything.
All it means is that there will always be plenty of people who will rent for the rest of their lives and that is to the property investors benefit.
Forget the Auckland property market at the moment as it has had its day for the next couple of years.
Spread your wings and invest where the money is to be made and we all know or should know, that it is Christchurch.
Growth is guaranteed but yes there will be some say no it isn’t but they are the ones who will be forever missing the boat to financial freedom.
Everyone has a choice in this life it is those choices that make or break you.
Good investing

We currently have a new generation coming through that think that they can get ahead without doing anything.

Tell us how bad it was back in the days of cheap housing, professional jobs straight out of high school and free university grandpa.

TM2, currently the unproductive sector of property speculation is disproportionately large. It paints a grim picture of our countries per person productivity. Is this the rock solid tax base to rely on to cover the growing obligations such as Super/Health? Thankfully the Coalition is working tirelessly to tip the scales back towards innovation, factories and employment.

RP, property investment is very productive.
Without it there are going to be many tradespeople and business go broke and the tax take will be down as well if this government carries on with their current plans.
We can not rely on them at all to run this country and they are doing a shocking job so far, the NZD dropping as well,as business confidence and the tax take will drop in the next 6 months.
The COL is doing absolutely nothing of any benefit whatsoever to improve business profitability.
Increased wage bill, is going to be a big downer for business that is only just hanging in there at the moment.
Watch this space RP, this government is a big problem for NZ as many have been saying.

Well said TM2,

this creature, aka RP, is just looking for a fight with anyone at the end of the Bar's counter ... he just likes to provoke the ones who have done well for themselves and others around them. So excuse his limited knowledge, narrow horizon, and Dark jealous personality.

He only produces Hot air and BS really, ... has lots of useless time on hands to dig in every old article and comment to show us he is smart and can debate a conversation to a kill ... while in fact he has been proven to be the exact opposite !

What started as an electionaring slur demonising Landlords and creating a new enemy for the "workers" to blame and fight spread like a fire through the idiots and fools who believed and supported them.

They forgot that Govs Come and Go, and Polys are indeed dispensable, Unlike NZ businesses, landlords, and properties which will remain long after this CoLs is brushed away in 2020.