The repression of saver's returns gathers pace as the OCR is cut and more are signaled. David Chaston updates what has happened to the term deposit market

Another OCR review, another rate cut.

And for savers, that likely means lower term deposit offers.

This morning, ASB is the latest to reduce their term deposit rates.

And BNZ has cut its bonus saver rates for its RapidSave product.

The trimming of term deposit and savings rates should now come as no surprise to savers. The same cold wind blew through this sector in June when the previous OCR cut went through.

Rates for a one year term deposit are now -50 basis points lower now than they were at the start of 2015, and that is before the latest round of reductions flows through the market.

Term deposit rates are now as low as they were back in 2009.

The prospect is that they will go even lower, below the lowest we have seen since we started monitoring them in 2001. And using the RBNZ data to go back further, it is likely that savers won’t have faced rate offers this low since the 1960’s.

Term deposit rate offers are very ‘repressed’.

The ASB rate changes this morning relate to their whole rate card as they have pushed through a -25 bps cut to nearly every term.

Earlier in the week, ANZ also reduced their rates, although not quite as aggressively.

The only opportunity is one that may close very quickly. That is because not every bank has yet announced their cuts.

On the savings side, BNZ today cut their Rapid Save rate to 3.65% from 3.90% – provided you meet the ‘bonus’ criteria. Otherwise their 0.10% rate still applies.

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. Remember, these are not where rates will settle to, just where they are at 9:00am on Friday, July 24, 2015.

for a $20,000 deposit 6 mths 1 yr 18 mths 2 yrs 3 yrs 5 yrs
3.65% 3.85% 3.95% 4.05% 4.10% 4.20%
ASB 3.55% 3.70% 3.85% 3.90% 3.95% 4.05%
3.80% 4.00% 4.05% 4.10% 4.20% 4.40%
Kiwibank 3.75% 4.00%   4.15% 4.30% 4.70%
Westpac 3.75% 4.00% 4.05% 4.10% 4.20% 4.30%
Co-op Bank 3.90% 4.00% 4.10% 4.20% 4.30%  
Heartland Bank 4.00% 4.05% 4.10% 4.15% 4.25% 4.40%
HSBC Premier 3.50% 3.60% 4.00% 4.10% 4.20% 4.40%
RaboDirect 3.95% 4.05% 4.10% 4.15% 4.30% 4.50%
SBS Bank 3.90% 4.05% 4.15% 4.15% 4.30%  
3.75% 4.00% 4.10% 4.20% 4.50% 4.70%