Kiwibank lifts term deposit rate to 4%
Kiwibank has increased its oneyear term deposit rate to 4%, placing it above most competitors.
The new rate is a 0.25% rise and requires a minimum $10,000 investment, but those depositing $5000 to $9999 will also receive a rate of 3.9%.
The offer will be available for two weeks from yesterday. A spokesperson for the bank said savers had had a tough time over the past few years due to low interest rates.
ANZ senior economist Miles Workman said customers could expect short-term rates to increase as the official cash rate (OCR) is expected to continue to rise.
‘‘It’s not a surprise that term deposit rates are lifting as the OCR goes higher. Essentially you can think of a bank as a retailer of money of sorts, where they borrow money from households who put in deposits, and they lend to people who want a home loan.’’
He said because longer-term rates already factored in expectations for a higher OCR, there was less scope for them to rise.
‘‘Short-term interest rates have more room to lift, simply because the OCR is at 2%, and we expect it to rise to a peak of 3.5%.’’
Workman said he expected the Reserve Bank to increase the OCR 0.5% tomorrow, with another 0.5% rise in August, followed by possible slower rises of 0.25% from there.
Kiwibank’s new rate sits above what competitors are advertising online, with ANZ currently requiring a $10,000 investment to return 3.65% on a one-year term. ASB and Westpac also sit at 3.65%.
The movement in Kiwibank’s one-year term rates follows a number of banks lowering interest rates on home loans as the cost of wholesale funding for the banks dropped in recent weeks. Commentators said this gave lenders the opportunity to reduce the retail rates they offer customers.