10 Nov 2010

Investors attracted by term deposits, say banks

11:32 am on 10 November 2010

Investors are flocking to term deposits in response to investment company failures and a stagnant property market, according to banks.

Most banks are offering more than 5% interest on term deposits of more than $10,000, despite a low official cash rate.

The ASB Bank says its survey of 1200 people shows investor confidence in term deposits soaring at the expense of other investment options and it is now the most highly regarded option for customers.

ASB says banks are offering attractive interest rates because new Reserve Bank rules require banks to source more of their funding locally.

Kiwibank says it has also seen a significant increase in people taking out term deposits due to nerves about finance companies and the slow property market.