Some bank chiefs are questioning whether deposits are falling out of favour with New Zealanders after a report by KPMG found home loans grew 8 percent last year, but deposits, which fund them, failed to keep pace.
Photo: RNZ / Cole Eastham-Farrelly
The country's biggest banks, ANZ, and ASB, saw deposits shrink in the September quarter.
A banking partner at KPMG, John Kensington, said that raised some eyebrows among bank executives.
"What they'd seen in that three month period was a very, very significant mismatch and the question then was raised: is it a temporary blip or is it a structural change to the way things happen?"
Savers have long grumbled about paltry returns from the big banks.
The associate professor at the School of Economics and Finance at Massey University, David Tripe, said savers turned to other investment classes to bolster returns, including property and stocks.
"It's indicative of a longer term struggle that the banks are going to face. They have been growing their lending at quite a substantial rate. That potential generates some deposits out the other side of it.
"But it's not all, at this stage, being put back into the banks," Dr Tripe said.
The banks took notice.
They slowed lending by voluntarily tightening lending restrictions on investors following a Reserve Bank consultation paper released on 19 July, and excluded foreign income from affordability calculations for home loans.
They also boosted deposit rates.
The chief executive at ASB, Barbara Chapman, said savers responded.
"We've seen deposits a bit slower in the (December) half, but actually in the period closer to Christmas deposit growth did pick up again."
"So we're just keeping a watching eye on which way some of these things are moving," Ms Chapman said.
KPMG's John Kensington suspects the dip in bank deposit growth will be temporary.
But he thinks savings habits may be changing.
He points to Kiwisaver, arguing it may be reducing the amount of extra cash put aside for a rainy day.
"You take your pay packet now, you take your tax out, you take your expenses out, and so many people are putting their money into Kiwisaver, so there is just not the money available to go into deposits."
Mr Kensington added that some younger New Zealanders were turning to riskier, but potentially more lucrative, investments like peer-to-peer lending to get a foot on the increasingly unaffordable housing market.
"We had in our mind what a typical (peer-to-peer) investor might look like. We thought it might be a wealthy person, perhaps dabbling their toes in peer-to-peer to see if it works and if it did, then invest a little bit more. And yes, there are some people like that."
"But there's a lot of younger people in there simply wanting... a better return than a bank deposit rate will give them."
"So they go for something in the peer-to-peer space because they just acknowledge that the deposit that they've got for their house just won't grow quickly enough at the current deposit rates," Mr Kensington said.
Any move away from deposits, however, is likely to be slow.
Many older Kiwis are comfortable with holding extra cash with their bank, in on-call accounts and term deposits.
But the dip in deposits indicates banks can not take savers for granted, even in a low interest rate environment.