Debt down and term deposits up, says bank

Photo / Steven McNicholl

People have been paying off debt over the last 12 months but they have been saving as well, according to Westpac.

"We've had a look at the data from our side and what we can see is continuing growth in savings, particularly in term deposits," Gai McGrath, Westpac's general manager for retail, told the Herald.

"We have seen over 11 per cent growth in deposits over the last 12 months, so people are continuing to use term deposits in particular as their preferred savings vehicle," she said.

McGrath said it seemed people were keeping the money in a safe place for a purpose, but haven't yet decided what to do with it.

The number of women opening savings accounts is up by 5 per cent, compared with a 4 per cent improvement for men, over the last 12 months.

"On the other side of the equation, we have had significant growth in the number of our customers who are ahead in their mortgage repayments, and it is actually coming from all age groups," she said.

This normally happens with people who are getting closer to their retirement but among people aged 25 to 34 there has been a 13 per cent increase in the number of people who are three months or more ahead with their repayments.

McGrath said people were still cautious and appeared to be unsure about when to make investment decisions after going through a period of high debt from 2003 to 2008.

"I think it is unlikely that New Zealanders will go back to the same levels of household debt that we saw in that period," she said.

"There is a lot of caution about the economy - interest rates are at all time lows - so it is a good time to invest if you look at the fundamentals."