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deposit rates

Banks continue slugfest

The main point of action in the deposit market continues to be banks fighting it out over one year, interest at maturity (IAM) rates.

Monday, 19 November 2007
Kiwibank 9.00
ANZ 8.90
ASB 8.90
Bank Direct 8.90
BNZ 8.80
Rabo 8.75
Westpac 8.70
National 8.75
TSB 8.00
In the one-year IAM war, KiwiBank, upped the stakes last week taking its offer to 9.00%, surpassing ANZ, ASB and Bank Direct.

We will watch closely to see whether ANZ, which aims to own this space, will match or better KiwiBank.

The spread of bank offers for one-year money are illustrated in the table. We have used best rates and some are IAM, while other organisations don't offer a higher rate for IAM money. The minimum investment is $10,000.

Besides those changes ASB, Bank Direct, HSBC, KiwiBank and RaboPlus have all moved their rates in the past week. Rabo increased rates across the board by between 10 and 20 points. ASB, Bank Direct and HSBC all made a number of changes to various terms.

The curious thing about this little one-year war is that people tend to invest in bank TDs for short terms of around 90 days. The banks struggle to get money in for one-year rates and find it even more difficult to get longer term money.

The longer-term investments tend to be made with finance companies.

Amongst the finance companies we saw some of the bigger players, such as Dominion Finance and Fisher and Paykel Finance shift rates, however the changes were relatively small compared to some changes in the past month.

As usual UDC made some rate adjustments this week. Over past months we have come to rely on UDC making at least one change to its rates offering in a week.

What is also worth noting is that UDC has introduced some new terms. The new terms are mainly for interest at maturity over 12 months (8.95%), as well as interest monthly under 12 months.

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