Behaviour of aging New Zealanders to impact interest rates, asset prices, RBNZ says
Kerry Watt, director of Financial System Assessment at the central bank, said the economic impact will unfold slowly, but financial institutions need to understand and be prepared for the structural changes and potential risks associated with this long-term change.
'Understanding and adapting to these changes will be key to maintaining financial system resilience,' he said.
The Reserve Bank of New Zealand report found that overall savings are expected to rise in the near term before declining as people typically borrow when young, save during their working years, and draw down those savings in retirement.
'Increased saving could put downward pressure on interest rates and lift the value of assets like housing and equity. Demand for housing loans may decline as the population ages,' it said. 'Older investors may favour lower risk assets.'
Increased deposit funding and reduced demand for mortgages may encourage a shift towards other types of lending and expansion in the provision of other services, the bank added.
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