BNZ has made a grab for the deposit market offering a 4 per cent term deposit rate - the highest rate offered by a major bank in over a year.

The two week special, announced by the bank this morning, is markedly higher than other competing rates.

According to interest.co.nz the nearest rates being offered are around 3.6 and 3.5 per cent for two year term deposits.

Announcing its result last month BNZ said it had seen a systematic drop in deposit growth since March and banks were facing a competitive market for deposits.

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Banks have been struggling to match the growth in their property lending with deposits and are being forced to borrow more money on the international wholesale market to fund it.

Likewise low interest rates and a booming property and share market have encouraged savers to plough their money into houses and shares.

BNZ's acting director of retail and marketing David Bullock said it was the first time an interest rate on a two year term deposit from a major bank had hit the four per cent interest mark in over a year, which was good news for savers.

"While interest rates are generally low, it's great to be able to offer good returns to reward long term savers."

Savers have to have minimum of $5000 with interest paid a maturity.