For a long time deposit rates have only been moving in one direction - down, down and down.
But ASB bank has now bucked that trend to offer a 1.75 per cent interest rate. The only catch - savers have to lock in their money for five years to get it.
ASB has lifted its five-year rate from 1 per cent and it is now much higher than the 0.9 per cent which the other main trading banks are offering.
According to Reserve Bank figures the average interest rate on five-year terms was 0.96 per cent in December, down from 2.64 per cent in December 2019 and 3.81 per cent in December 2018.
ASB has also increased other term deposit rates although at much smaller increments. Its nine and 12-month rates will rise from 0.75 per cent to 0.8 per cent. While its 18-month and 24-month rates will rise from 0.8 per cent o 1 per cent.
Its three-year rate rises from 0.9 per cent to 1.25 per cent and its 48-month rate from 1 per cent to 1.5 per cent.
The new rates come into force from Tuesday March 2.
Craig Sims, ASB executive general manager of retail banking said the bank was taking the opportunity to offer Kiwis with cash savings some highly competitive term deposit options while also balancing the needs of borrowers who have been benefiting for some time from an extremely low interest rate environment.
"While there's been much focus on home loan rates, customers with funds to invest are often seeking to balance their portfolios, and term deposits can be an important part of the mix.
"Given the performance of the New Zealand economy through Covid-19 has been stronger than anyone anticipated and our commitment to helping the financial progress of all New Zealanders we're pleased to be able to support our savers with these market-leading term deposit rates."
The amount of money Kiwis have in terms deposits has fallen over the last year. In December 2020 there was $169.2 billion in term deposits, down from $194b a year earlier.
That is despite overall deposits in banks hitting $404b in December, up from $365b in December 2019.
The higher rates come as economists around the world talk about the potential for rising inflation as a result of all the stimulus which governments and central banks have poured into economies to keep them going amid the Covid-19 outbreak.
