Latest / Best of Business / Jenee Tibshraeny: NZ Herald Wellington business editor on depositors rushing to take advantage of high interest rates

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Jenee Tibshraeny: NZ Herald Wellington business editor on depositors rushing to take advantage of high interest rates · Best of Business

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  Speaker 2: Say has put an extra two point one billion dollars
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  Speaker 2: in term deposits in July, locking in higher interest rates
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  Speaker 2: before the Reserve Bank drop the official cash right banks
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  Speaker 2: now hold a record one hundred and thirty six billion
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  Speaker 2: dollars in term deposits and Gennative Chrainey is The Herald's
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  Speaker 2: Wellington Business editor. Hey you name hey, Heather. So do
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  Speaker 2: you think that record number is as a result of
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  Speaker 2: people getting in there trying to lock in those higher
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  Speaker 2: deposit rates.
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  Speaker 3: I think it is that term deposit number has been
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  Speaker 3: tracking up, but I didn't notice that in July the
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  Speaker 3: jump in term deposits was quite big. So two point
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  Speaker 3: one billion dollars that's quite a bit of money, one
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  Speaker 3: point six percent more than the previous month. And you know,
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  Speaker 3: I note that in July that's when the Reserve Bank
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  Speaker 3: released that statement where it suggested it might start cutting
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  Speaker 3: interest rates sooner than August next year, which you know,
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  Speaker 3: back in May was when it said it would likely
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  Speaker 3: cut interest rates. So I mean, I was one of
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  Speaker 3: these people, I thought on July ten, I better look
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  Speaker 3: at how my money's going and maybe lock in some
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  Speaker 3: high interest rates now. The thing though, that was quite
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  Speaker 3: surprising looking at the July figures was that the amount
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  Speaker 3: of money that people put in their transaction accounts, you know,
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  Speaker 3: just their call accounts, that also went up, and that
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  Speaker 3: went up by the most that it's gone up in
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  Speaker 3: about two and a half years. So not only did
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  Speaker 3: people put more money in term deposits, but they actually
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  Speaker 3: put more money into the bank generally.
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  Speaker 2: Interesting. Yeah, So if it's not coming from the transaction
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  Speaker 2: and the savings account balances, right, if they're not taking
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  Speaker 2: it out of that here's my easy money account, where
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  Speaker 2: are they getting this money from?
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  Speaker 3: Yeah? Well, look that is my big question, and I've
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  Speaker 3: been doing a big ring around today to ask various people.
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  Speaker 3: It probably isn't higher welfare or benefit payments because those
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  Speaker 3: changes are made in April. It probably isn't text changes
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  Speaker 3: either because those income tax cuts that were getting they
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  Speaker 3: only kicking in August. But what it could be, and
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  Speaker 3: this is what wespec's former treasurer Jim Reardon said, was
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  Speaker 3: that back in July term deposit rates were much more
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  Speaker 3: attractive than bond yields. So he thought that if people
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  Speaker 3: there were a bunch of bond maturities at that time,
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  Speaker 3: so if you received money because you're the bonds you
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  Speaker 3: invested and matured, you would have been much better off
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  Speaker 3: putting your money in a term deposit than reinvesting it
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  Speaker 3: in bonds. So he thought that the fact that the
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  Speaker 3: bond yields was so much lower than the term deposit
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  Speaker 3: rates at that point might have pushed more people into,
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  Speaker 3: you know, not invest in bonds and put the money
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  Speaker 3: in the bank. But so I think that's, you know,
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  Speaker 3: quite a plausible thing. I also took to Sharon Zooner,
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  Speaker 3: the chief economist at A and Z, and she thought,
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  Speaker 3: you know, things were pretty tough back in July, so
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  Speaker 3: people were possibly being cautious, you know, worried they might
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  Speaker 3: lose their jobs, not spending too much, just popping them
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  Speaker 3: money in the bank. Saving. My big question, and so
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  Speaker 3: this is also Sharon's Olensborg question, is you know, there's
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  Speaker 3: quite a bit of money that's sitting in the bank there,
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  Speaker 3: those those balances have been rising in the high interest
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  Speaker 3: rate environment. You know, how will people deploy that money?
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  Speaker 3: Is interest rates full and you know, as it becomes
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  Speaker 3: less appealing to keep your money in the bank.
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  Speaker 2: Interesting stuff.
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  Speaker 3: Well will they will they put it in the property market?
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  Speaker 3: That's my question.
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  Speaker 2: What do you think I'd say, no, what do you reckon?
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  Speaker 1: Yeah?
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  Speaker 3: I think they will, but there's quite a lot probably
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  Speaker 3: holding back. I don't think the pickup will be Nah.
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  Speaker 2: I think we know that. Yeah, I think we know it. Hey,
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  Speaker 2: thank you. Jane has always really appreciated, you know, to Trainy.
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  Speaker 2: The Heralds are Wellington business entity.
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