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.
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|
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?