Kiwibank has raised its nine-month term deposit rate to 3.55 percent and its one-year rate to 3.9 percent — the first significant move by any bank since the RBNZ's split OCR decision on May 27.
Kiwibank has lifted term deposit rates, the first notable move by any bank since the Reserve Bank's split OCR decision on May 27. The bank raised its nine-month term deposit rate by 15 basis points to 3.55 percent, and its one-year rate by 5 basis points to 3.9 percent.
The timing is not coincidental. While the RBNZ kept the official cash rate at 2.25 percent on May 27, the 5-4 vote split — resolved only by Governor Anna Breman's casting vote — surprised markets. Infometrics chief forecaster Gareth Kiernan said the unexpectedly close result had pushed up swaps pricing for future meetings by 5 to 10 basis points. "Financial markets had largely expected those rate rises anyway, but a bit of confirmation from the bank and the fact that we were closer than anticipated to a hike yesterday has increased market confidence about the track," he said.
The broader rate picture is already shifting. Reserve Bank data shows two-year home loan rates have risen from a low of 4.5 percent last year to around 5.2 percent currently — the most significant move for mortgage rates since the trough. Term deposits have been slower to follow, but Kiwibank's move suggests banks are beginning to adjust.
What it means for savers
A 15 basis point lift on a nine-month term deposit is modest in absolute terms — on a $10,000 deposit it adds around $13 over nine months compared to the previous rate. But the direction matters more than the size. The RBNZ's signal that rate rises are coming sooner than previously expected means the window for locking in current term deposit rates may be closing. Kiernan noted that swap rates had fallen 15 to 20 basis points over the two weeks before the May 27 decision, which gave banks some room to move before passing costs on to depositors. That buffer may be eroding.
For savers who have been leaving money in low-yielding on-call or savings accounts, the calculus is starting to change — though the gap between mortgage rates and deposit rates remains meaningful, and anyone considering a term deposit should still compare offers across banks.
This article is for general information only and is not personalised financial advice. Seek advice from a licensed financial adviser (registered on the FSPR) for guidance specific to your situation.