ANZ removes the term deposit premium it used to justify passing on only 5 basis points to floating rate borrowers. But it retains all the margin grab on the mortgage side

ANZ has cut its 18 month ‘special’ term deposit rate by -15 basis points.

That takes the bank’s new rate down to 3.45% from 3.60%.

The 3.60% rate was pitched by ANZ as the reason it only passed on -5 bps of August’s -25 bps Official Cash Rate cut to borrowers. The bank’s story was “savers are benefiting, even though borrowers only get a part of the rate cut”.

This means the ‘benefit to savers’ has lasted just five weeks. But the cost to borrowers looks like it will be more permanent.

Other banks used the same strategy, following ANZ’s lead. It seems probable that they too will reduce or remove their 18 month specials as well, pocketing the margin gains.

The history of the ANZ 18 month rate is that it was reduced to 3.30% from 3.50% just after the March 2016 OCR rate cut. It stayed at this level for the 21 weeks to August 11 when it was raised to 3.60%. It has remained at this higher level for just five weeks, now reduced to 3.45%.

On August 11, just after the RBNZ rate cut, ANZ issued a media statement that included this:

Mr Hisco said ANZ was refocusing its lending and borrowing emphasis.

“On the deposits side, we have five times as many customers as those with home loans. Lifting term deposit rates will help customers grow their savings,” Mr Hisco said.

“We are sending a strong signal today to New Zealanders that at a time of record low interest rates, it is more responsible to pay down home loans and save, than borrow more. New Zealanders need to consider changing their financial strategies.”

Use our deposit calculator to figure exactly how much benefit each option is worth; you can assess the value of more or less frequent interest payment terms, and the PIE products, comparing two situations side by side.

All carded, or advertised, term deposit rates for all institutions for terms less than one year are here, and for terms one-to-five years are here.

Term PIE rates are here.

The latest headline rate offers are in this table. (now updated with new UDC rates)

for a $25,000 deposit Rating 6 mths 1 yr 18 mths 2 yrs 3 yrs 5 yrs
AA- 3.15 3.25 3.45 3.35 3.40 3.60
ASB AA- 3.20 3.20 3.65 3.25 3.35 3.55
AA- 3.15 3.25 3.60 3.35 3.40 3.60
Kiwibank A+ 3.50 3.25   3.25 3.40 3.60
Westpac AA- 3.50 3.20 3.20 3.25 3.30 3.40
BBB 3.50 3.25 3.50 3.20 3.25  
Heartland Bank BBB 3.30 3.40 3.40 3.70 3.70 3.80
HSBC Premier AA- 2.80 3.00   3.00 3.05 3.15
RaboDirect A 3.30 3.40 3.40 3.45 3.55 3.80
SBS Bank BBB 3.55 3.25 3.60 3.35 3.40  
A- 3.15 3.20 3.25 3.30 3.40 3.70
UDC AA- 3.25 3.55 3.65 3.45 3.45 3.65

Our unique term deposit calculator can help quantify what each offer will net you.