Kiwibank keeps mum on four-day deposit rate bonanza
The bank has advertised its "TD Tuesday" as a four-day offering with a "special Term Deposit mega rate" and seeks to raise funds as rates remain relatively low. Spokesman Bruce Thompson said the market was always competitive, and promotions like this are usually successful in attracting funds.
"It's a competitive environment out there, but there's an opportunity to attract funds," Thompson said. He wasn't willing to speculate on how much funding the deal would attract, nor predict its impact on the lending market.
In the BNZ Weekly Overview, Bank of New Zealand chief economist Tony Alexander said the cost of funding was relative to lending rates, and as offshore credit lines dried up, New Zealand banks have been forced to tap the domestic market. Alexander pointed out that as banks are forced to pay higher premiums to raise funding, they in turn had to pass this on to mortgage holders, which has kept long-term lending rates relatively high.
The average term deposit rate for between $5,000 and $10,000 at six months is 3.2%, and 3.74% for deposits between $10,000 and $50,000 at the four major banks, according to www.depositrates.co.nz data.