Banks lower TD rates ahead of OCR announcement
The past week was one of the most active ones in a long time as all the major banks cut their deposit rates in anticipation of a rate cut by the Reserve Bank of New Zealand.
Tuesday, March 8th 2011, 9:56AM
by Sophia Rodrigues
While the expectation is for a 50-basis-point cut in the Official Cash Rate, the quantum of cut in the deposit rates varied between banks. Some banks lowered rates for a period as less than 90 days and there were others who went as far ahead as the five-year term, and some made moves across the entire curve.
Incidentally, RaboDirect who has been sitting ahead of the rest across most of the curve decided to stay mum, thus further increasing the attractiveness of its investment rates.
Among the majors, Westpac and ASB lowered deposit rates right from 90 days to five years but the latter made steeper cuts in the long-term and also for one-year rates.
The net result is that Westpac is offering the best one-year rate of 4.70% among the four Australian majors, and its rate is now equal to Kiwibank's. TSB Bank is offering a more attractive 5% and RaboDirect is the leader with 5.55%.
Westpac is also leading among the four majors in the nine-month term, offering a rate of 4.90% for deposits over $10,000. BNZ is closely following with 4.80% and is accepting minimum deposit of $5,000.
In the 90-day term, ASB is leading among the four majors with 4.20% while BankDirect is offering a slightly higher 4.30%. The other three offer a maximum of 3.50% and the market leader RaboDirect is ahead at 4.55%.
The 18-month term was an interesting one which saw three of the four majors lower their rates by 60 basis points each while the fourth - Bank of New Zealand - reduced by just 30 basis points. Thus we now have BNZ leading there with 5.10% while Westpac offers 4.90% for amounts over $10,000. Kiwibank is matching BNZ with 5.10% while TSB is marginally ahead at 5.15% and RaboDirect is far ahead at 5.40%.
In the longest five-year term, Westpac made just a 25-basis-point cut compared with BNZ's 50 basis points, but the latter is still leading with 6%. Kiwibank is offering a more attractive 6.25% but RaboDirect is beating that with 6.45%.
The past week also saw moves by some non-bank deposit taking institutions with UDC and PSIS making rate cuts across the curve.
AA rated UDC is now offering just 4.85% on one-year deposits which is behind TSB Bank's 5% but sits slightly higher than the other major banks. Asset Finance which is B rated also lowered some rates and is offering 12-month at 8.50%.
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