Many banks rush to cut term deposit rates, leaving few outliers and fewer options to lock in what were already considered low rates before they are trimmed even lower

Many banks rush to cut term deposit rates, leaving few outliers and fewer options to lock in what were already considered low rates before they are trimmed even lower

The opportunities for yield in term deposits just got worse, and may get worser* before too long.

Westpac has pushed through substantial cuts, following ANZ, TSB and Heartland Bank. They all followed BNZ and ASB. The other big banks are expected to follow soon.

Some of the cuts are substantial, exceeding -30 basis points.

The only mitigating aspect is that most of these reductions are coming at the longer end of the rate card; the shorter end, where most savers are, have got off relatively lightly so far.

The result of all this is a flattening of the term deposit rate curve.

However, there seem to be a few opportunities still available. But you will have to be very quick.

For example, ASB and Kiwibank's 3.40% for six months seems tasty (relatively) in the current environment.

RaboDirect's two and three year rates do too at 3.55% and 3.70% respectively.

But it's hard to see any of these four rates lasting very much longer

These rates have a big impact on banks' cost of funds, more so than wholesale money rates. So don't expect banks to be soft touches when you try to negotiate some sort of premium. Even a deposit of $100,000 may not attract a premium these days. Switching is probably your best bet at this time if you need a better yield.

The updated 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 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.

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
8 / 11
  1 yr   18mths 2 yrs 3 yrs
Main banks                
ANZ AA- 3.00 3.25 3.35 3.25 3.20 3.20 3.25
ASB AA- 2.90 3.40 3.25 3.25 3.20 3.20 3.25
AA- 2.90 3.25 3.35 3.25 3.20 3.20 3.25
Kiwibank A 2.90 3.40 3.30 3.40   3.45 3.50
Westpac AA- 2.95 3.25 3.40 3.40 3.40 3.45 3.50
Other banks                
BBB 2.90 3.20 3.25 3.30 3.25 3.30 3.40
Heartland Bank BBB 3.15 3.35 3.45 3.45 3.50 3.50 3.55
HSBC Premier AA- 2.60 2.90 2.90 2.90   2.90 3.00
ICBC A 3.05 3.35 3.35 3.45 3.45 3.50 3.55
RaboDirect A 2.80 3.30 3.30 3.35 3.55 3.55 3.70
RaboDirect BBB 2.90 3.25 3.30 3.40 3.40 3.45 3.50
A- 2.85 3.10 3.15 3.15 3.15 3.15 3.25

Term deposit rates

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Update: An earlier version incorrectly stated the TSB 3 year rate was 3.15%. It has now been corrected to 3.25%.

* Yeah, yeah, I know; it's not a real word. But what would you use after you have gone from bad to worse? What 's next?

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?

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time to pull your money and look at other options, the banks don't want it as they are showing by treatment of TD holders

Indeed, a safe deposit box with a selection of foreign currencies and a few ounces of gold is looking better by the day.

They do need our money. They just don't want to pay for it. As an owner of DIV and FNZ, there seems to be much capital inflows, but not sure where people can keep their stash. Bonus bonds perhaps.

It's probably fairer to say that mortgage holders dont want to pay for it. They clamor for lower still rates, and there is two sides to that coin.

Property perhaps?

As an ex-property investor, a 4% rental yield is starting to attractive.


Tough on retired people and pensioners who rely on modest savings in the bank for their wellbeing.


I agree. It’s just another symptom of monetary policy that has seen to only benefit existing asset holders.

Indeed, the RBNZ should not be sacrificing these folk to protect speculators.

You mean lazy investors who have already benefited massively from the system over decades. Who now expect continued free lunches at the gravy trough at the expense of FHB and young families with mortgages via higher interest rates. Their conflicted morals are interesting to watch.

Higher interest rates (so long as wage inflation also picks up) would help FHB,

Merrydaze. The investors you malign are neither 'lazy' nor have 'conflicted morals'. Many landlords put a lot of effort into their properties and carry significant risk; I'm not one but have mates and family who are and I watch them sweat at times when things go pear shaped. Lazy is putting all your cash in the bank and snivelling when interest rates are low and inflation erodes the capital value (except older investors where a strong weighting to TDs is often sensible). Housing investors are simply responding logically to market forces, taxation treatment, and government policy when they choose this investment class over others; housing investment can just as validly be argued to be a noble endeavour.

Middleman. I was replying in support of TTPs dry sense of humour baiting RP, ironically it earned him a lot of thumbs up lol. That was exactly the point I was making I was referring to term deposits, totally agree with your investor sentiments. The snivelling TDs as you call them want more free money via higher interest rates, higher interest rates are at the expense of young families and FHB who once again carry the can.

Why should I be paid a pittance for TDs just to give banks cheap money to gamble on(or prop up) a falling housing market; and still incur OBR risk??

Maybe because there are so many people like you who are willing to leave their cash on TD and take on the chin whatever rates the banks pay. They'd have to try a bit harder if Kiwis were more yield focussed.

Maybe because its FREE money at the expense of others paying higher mortgage interest.

This policy (driven by RBNZ OCR mainly I reckon) forces people out of safe bank deposits into riskier assets classes such as shares and property.

And it rewards borrowers and punishes savers.

All a**-about-face isn't it?

Probably better to foget TDs and add it to your Kiwisaver ( Conservative ). Especially if your over 65.

Which conservative Kiwisaver funds are delivering >3% after fees?

Probably time to forget TDs and put it in KiwiSaver.
It also offers more flexible access especially for the over 65s.

KiwiSaver doesn't pay you monthly interest and you don't have control over your money. I wouldn't consider KiwiSaver a "Safe" option for large amounts of money. Not an "Investment" option for me, wouldn't even put money into it while I was working let alone a lifetimes savings that could just disappear overnight. The secret to money and happiness is knowing when you have enough of it and not to get greedy.

Just put a TD down at ASB for their 6 month rate of 3.4% which is as good as it gets at present, especially as the interest is paid monthly. Can only hope it holds for another month when the next TD is due to roll over. Tough times ahead I suspect will put the squeeze on.