Bank Term Deposit Rates

[kiwi2007]

ASB beating the others this morning and raising 3 year to 5.1% (5year 5% and 1 year 4.6%)

[Mysterion]

5%

[Basil]

Yeah I saw that.  TSB Bank 5%, across multiple different terms.
Finally, some joy for people who are into term deposits.
Retiree's and others who are coming off 1 year terms they locked in this time last year at 2% will feel better about getting 5% and they would probably feel even better if they knew how much the market overall for both bonds and shares has gone down in the last year.
Despite only paying 2% those who locked in for a year this time last year have enjoyed one of the better performing asset classes despite their purchasing power declining in real inflation adjusted terms.

2022 has sort of been a game of he who loses the least is the winner.

[winner (n)]

even 5% won't seem much when rates get 10%/15%

So don't lock in for too long

[BlackPeter]

Yeah I saw that.  TSB Bank 5%, across multiple different terms.
Finally, some joy for people who are into term deposits.
Retiree's and others who are coming off 1 year terms they locked in this time last year at 2% will feel better about getting 5% and they would probably feel even better if they knew how much the market overall for both bonds and shares has gone down in the last year.
Despite only paying 2% those who locked in for a year this time last year have enjoyed one of the better performing asset classes despite their purchasing power declining in real inflation adjusted terms.

2022 has sort of been a game of he who loses the least is the winner.

Hmm ...

7% inflation
5% interest reduced by whatever your personal tax rate is.

Not sure I would call that "JOY"?

[Basil]

To understand the joy its helpful if you put yourself into the shoes of an 85 year old retired couple.
These are people that generally play things ultra safe and "Jack and Jill" we'll call them are widely reported to have complained that their nest egg of $500,000 was only earning 1% so they only had $5,000 (less tax) of pocket money to live on, on top of their superannuation.  People like them will seldom if ever, dip into their capital because they are "old school" and you don't ever do that so over Covid they cut back and lead a pretty miserable existence on basically superannuation and not much else.

Oh what joy there is to be had when they suddenly find that their nest egg will earn them $25,000 per annum less tax, gosh that's a heck of a lot of meals out with their friends and family and presents for their grandkids!  I think its the simple things that bring the most pleasure when you're older, well that's what they tell me...

Jack and Jill have lived for decades in a low inflation environment, and they know that the purchasing power of their income is going down but $25,000 per annum extra is a lot of play money whereas $5.000 is peanuts, its that simple. You have to go back many many years since people like them could get 5% on their money.  Try telling them that they're going backwards after tax and inflation, and they'll be too busy out enjoy coffee and meals with their friends and family to care.

I come across people like this in my professional capacity, so I am not making this stuff up.  this is how it really is for a lot of older folks and some of them are the nicest people you could ever hope to meet.

[Basil]

https://www.interest.co.nz/personal-finance/118674/term-deposit-rates-have-jumped-week-following-big-ocr-rise-last-week-and

[kiwi2007]

Some pretty good rates now on offer by the banks (compared to recent years) ranging from 5.1% for 9 months through to 5.25% for 5 years.
So, for some sticking cash away for up to 5 years will be tempting, but what happens if the unexpected happens and you need the money urgently? I had no idea, so I looked...seems that, if you go into the managers office begging on hands and knees, they may allow you to withdraw. Punishment seems to generally be a 2% deduction from the rate already paid on the amount being withdrawn.

BNZ
https://www.bnz.co.nz/support/investments/term-deposits/making-an-early-term-deposit-withdrawal#:~:text=Term%20deposits,rate%20adjustment%20of%202%251.

ASB
https://www.asb.co.nz/content/dam/asb/documents/term-investments/2022/asb-term-deposit-early-withdrawal-information-august-2022.pdf

[Raven]

Some pretty good rates now on offer by the banks (compared to recent years) ranging from 5.1% for 9 months through to 5.25% for 5 years.
So, for some sticking cash away for up to 5 years will be tempting, but what happens if the unexpected happens and you need the money urgently? I had no idea, so I looked...seems that, if you go into the managers office begging on hands and knees, they may allow you to withdraw. Punishment seems to generally be a 2% deduction from the rate already paid on the amount being withdrawn.

BNZ
https://www.bnz.co.nz/support/investments/term-deposits/making-an-early-term-deposit-withdrawal#:~:text=Term%20deposits,rate%20adjustment%20of%202%251.

ASB
https://www.asb.co.nz/content/dam/asb/documents/term-investments/2022/asb-term-deposit-early-withdrawal-information-august-2022.pdf

I've known a few people who have broken term deposits on "hardship" grounds and they have never had any real trouble. I guess the banks don't want to appear in the media looking mean and nasty.

The difference these days between bank rates and corporate bonds seems so small I personally find it hard to justify bonds for any savings that I genuinely feel I won't need for 5+ years. 

[Onemootpoint]

The main banks are a bit slow to adjust their rates; it's been a week since the latest rise. Only a few of the challenger banks have responded.

[Untamed]

Heartland have raised theirs today.

https://www.heartland.co.nz/savings-and-deposits/interest-rates

[Onemootpoint]

 Kiwibank's 90 day notice saver; now at 4.75%. This is a Pie Investment

32 day at 4.05%. This is a Pie Investment.

On call account: 3.85% Pie option available.

[Basil]

Rates definitely getting a move upwards in recent days
https://www.interest.co.nz/saving/term-deposits-1-to-5-years

[kiwi2007]

There hasn't been much movement recently but this morning ANZ, BNZ and Westpac put their short term rates up (up to 18 months) whilst BNZ and Westpac dropped their 4 and 5 year rates.

[Onemootpoint]

https://www.interest.co.nz/personal-finance/120771/term-deposit-rate-increases-are-starting-filter-through-although-they-are