We look at today's 'best term deposit rates' in the face of falling wholesale rates and benchmark bond yields

2016 has started out with international bond yields under pressure and falling.

Locally, wholesale swap rates are also falling.

That has resulted in low term deposit offers.

But in the past few days, both the international situation and the local wholesale markets have been under added pressure.

It is not hard to suspect that term deposit offers may be about to fall again from current levels.

If that is the case and you have funds rolling over or new money you wish to park, locking it in now at current rates could help you avoid additional disappointment.

Of course, no one knows what the future will bring, me included, so it comes down to your own individual assessment of the market pressures.

If you think local term deposit offer rates will go lower, the following chart sets out who among New Zealand’s retail banks is offering the highest face rates for the various terms, right now:

Of course, there is more to an investment decision than simple offer rates. You may well be interested in how interest is paid or compounded. The more often it is, the lower the rate offer.

In addition, you should know that some other specialist banks also offer term deposits, some with rates higher than set out in the above graphic.

For example, the Bank of India (in NZ) offers 3.70% for six months, 3.80% for 12 months, and 4.00% for three years. ICBC, Kookmin Bank and the Bank of Baroda are also banks that have local offers that may seem attractive compared with our main retail banks.

Of course there are many non-bank institutions – some with investment grade credit ratings (UDC, Liberty Financial and Medical Assurance Society) – that also should be assessed. Use our term deposit pages to start that review.

Falling interest rates are especially tough on savers. In a falling market, the balance of earnings availability and the term of the rate offered can involve stressful choices. Using term PIEs can also give a small extra after-tax effect.