New Zealand’s central bank says ageing population to reshape financial system

New Zealand’s central bank said on Tuesday that an ageing population will change how people save, borrow, and invest, which could affect interest rates, asset values, and the demand for financial services.

In a report released by the Reserve Bank of New Zealand, the bank said total savings are likely to increase in the short term but will decline over time as people move through life stages—borrowing when young, saving during their working years, and using those savings in retirement.

The report said more savings could lower interest rates and increase the value of assets such as housing and shares. However, as the population ages, demand for housing loans may fall, and older investors may prefer safer investments.

The central bank said this shift could lead to more deposit funding and less demand for mortgages, encouraging banks to offer different types of lending and expand other services.

Kerry Watt, director of Financial System Assessment, said the impact will happen slowly but financial institutions must understand the risks and adjust. He said the key to keeping the financial system strong is understanding and adapting to these long-term changes.