Talk Money: March 22, 2016
The banks have been reluctant to pass on the recent OCR cut to borrowers. But they have proved much keener to cut savings rates.
That is bad news for savers, who have $141 billion invested in New Zealand in savings accounts and term deposits.
The banks are offering rates of just over 3 percent for one to five year term deposits. The rates for periods of between 90 days and one year are typically in the 2 percent range.
More than one bank has cut its 30-day term deposit rate to 1 percent (annualised).
The lower savings rates are particularly hard for retirees and anyone else relying on the interest they earn from their savings.
The search for higher returns is one of the factors driving the New Zealand share market. Profitable companies are offering dividend yields of around 6 percent.
The local market has risen 75 percent in five years and many companies are starting to look expensive.
The experts say it is unlikely the next five years will see the market rise by another 75 percent. So investors need to be cautious about where they put their money.