While not market-leading like the Kiwibank change, it is worth reporting that yet another bank has raised its term deposit offers today.
Challenger bank SBS Bank has raised its six month offer to 3.25% (IAM) and its nine month offer to 3.30% (IAM).
Given that mortgage rates are trending lower at present, rises in term deposit rates seem counter-intuitive.
Today's changes represent +10 bps rises.
They position SBS Bank mid-pack both when compared to other challenger banks, and when compared with the main banks.
Most banks are deposit-funded so these costs are the primary driver of bank margins. For challenger banks, they are almost entirely deposit-funded (with perhaps HSBC and Rabobank the main exceptions). And these rates very much limit how low mortgage rates can go. To go much lower (other than for attention-grabbing 'specials'), that will mean that deposit rates will have to be cut and there are no signs yet that that is imminent.
In addition, FE Investments has also raised its rates, raising their one year offer by +20 bps to 5.00%.
Yet, wholesale swap rates are low and near record lows for durations out to five years. They shifted sharply lower yet again overnight. But only the four large Aussie banks have any wholesale funding. And even the Aussie-owned banks have less than 15% of their funding from wholesale sources.
Rates on offer in New Zealand are significantly higher than those available from the same institutions in Australia.
Rates in the table below 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.
The latest headline rate offers are in this table.
|for a $25,000 deposit||Rating||3/4 mths||5/6/7
|8/9 mths||1 yr||18 mths||2 yrs||3 yrs|