15 July 2025 – New Zealand faces an economic shift as the population ages, according to the Reserve Bank of New Zealand in a Financial Stability Report special topic article released today.
While the economic impact will unfold slowly, the Reserve Bank is urging financial institutions to understand and be prepared for the structural changes and potential risks associated with this long-term change, Director of Financial System Assessment Kerry Watt says.
“An ageing population is likely to influence savings, borrowing and investment behaviour. This in turn will affect interest rates, asset prices and the demand for financial products. The overall impacts may be complex and vary over time.”
As the population ages, overall savings are expected to rise in the near term before declining. People typically borrow when young, save during their working years, and draw down those savings in retirement.
Increased saving could put downward pressure on interest rates and lift the value of assets like housing and equity. Demand for housing loans may decline as the population ages. Older investors may favour lower risk assets.
For banks, increased deposit funding and reduced demand for mortgages may encourage a shift towards other types of lending and expansion in the provision of other services. For the insurance sector, demand for health insurance is expected to grow, while demand for life insurance may decline.
Demographic change and changes in the levels of savings and borrowing may also affect how monetary policy flows through the economy. In addition, increased expenditure on healthcare and superannuation will impact fiscal policy.
“Understanding and adapting to these changes will be key to maintaining financial system resilience,” Mr Watt says.
More information
The Grey Wave: Exploring the impact of an ageing population on the financial system: https://govt.us20.list-manage.com/track/click?u=bd316aa7ee4f5679c56377819&id=b0d0c803e0&e=f3c68946f8
