Interest rates could drop, house prices increase as people age

Banks’ lending and funding may be impacted. Deposit funding may increase, while credit demand for housing could decline.

If demand for housing loans declines, banks may increase other types of lending or expand provision of other services, such as wealth management, the briefing paper says.

By 2050, nearly a quarter of the population is expected to be aged 65 and as retirees begin to draw down on their savings, this may put upward pressure on interest rates and downward pressure on house prices, the RBNZ says.

This dissaving may include selling houses, putting additional downward pressure on prices.