SBS to offer 5 per cent deposit rate for one year term

Term deposit rates have risen in recent weeks but not as fast as mortgage rates. Photo / NZME

SBS Bank has launched a one year term deposit rate of 5 per cent - outstripping the rest of the market as banks slowly lift interest rates on term deposits.

Most of the main trading banks are offering 4.4 or 4.5 per cent for a one year term deposit.

The SBS offer trumps TSB's offer last week of 5 per cent as savers have to lock in their money for five years to get that.

Mark McLean, SBS Bank Group CEO, said term deposit interest rates had been at record lows since the Covid-19 pandemic and short-term rates in particular had lagged recent increases in the official cash rate.

"This increase from 4.50 per cent p.a. to 5 per cent p.a. represents SBS Bank's commitment to be competitive and support investors looking to grow their money in a term deposit," McLean said.

The small New Zealand-owned bank has taken a competitive stance on attracting deposits this year.

In June it was the first to offer a one year term deposit rate of 4 per cent.

McLean said the last time it offered a 5 per cent rate was in February 2015 and that was on a three-year term deposit.

Term deposit rates have risen much more slowly than mortgage interest rates.

While savers will be pleased to see the rise, the rates still remain well below inflation which came in at 7.2 per cent for the year to September 30.