Rising incomes and falling debt costs lift Kiwi savings
New Zealand households are saving again, with lower borrowing costs and rising business income boosting disposable cashflow.
Stats NZ data shows household saving rose sharply from $149 million in the March 2025 quarter to $804 million in June, as disposable income grew faster than spending.
“The main drivers of an increase in disposable income this quarter were increases in dividends received by households and self-employed business owners,” said Stats NZ institutional sectors spokesperson Will Bell (pictured left).
Household net disposable income rose 1.9% to $62.8 billion, while household spending increased 0.8% to $62.0 billion. The result lifted the household saving ratio to 1.3%, the highest in more than a year.
Dividends and business income drive gains
Bell said income growth was driven by stronger business earnings and dividend income.
“Total income receivable increased by $998 million (1.1%), driven by increases in the income of self-employed business owners (up 5.2%), and dividends paid to households (up 53%),” he said in a media release. “These increases were offset by a fall in interest receivable (down 8.5%).”
At the same time, interest payable fell 7.9%, reflecting the impact of a lower official cash rate (OCR) and falling lending costs.
“In the June 2025 quarter, interest receivable and interest payable both decreased, reflecting the impact of lower market interest rates and a reduced official cash rate,” Bell said.
Debt servicing costs are dropping
Westpac senior economist Satish Ranchhod (pictured right) said the improvement in household savings was significant — and likely to continue.
“Household spending on interest costs is falling, and that process is set to continue,” Ranchhod said in a Westpac analysis.
He noted that disposable incomes have risen around 3% over the past year, with gains concentrated in business and agricultural earnings, while wage growth remains subdued at just 2%.
“That lift in agricultural earnings has been reflected in stronger economic confidence and demand in many rural regions,” Ranchhod said.
Savings trend steadier than first thought
Stats NZ’s revised estimates show household savings have been “broadly steady since mid-2023”, rather than falling as previously reported.
“Updated estimates show that while New Zealanders have been spending, much of it has been on low-cost imported goods – meaning our total spending bill, and the related drag on our savings, has not been as bad as previously thought,” Ranchhod said.
Household wealth, including financial and housing assets, has remained largely unchanged over the past 18 months.
Lower mortgage rates free up household budgets
Ranchhod said falling mortgage rates are now flowing through to household budgets, supporting both saving and spending.
“Households’ spending on interest costs has fallen for a second quarter in a row. This is a key development for the RBNZ,” he said.
Ranchhod explained that while around 90% of New Zealand mortgages are fixed, the pass-through of lower rates is now accelerating as borrowers roll onto cheaper loans.
“Over the next six to 12 months, around half of all mortgages are coming up for repricing,” the Westpac economist said. “As this process continues, we should start to see the RBNZ’s 300bp of OCR cuts over the past year having a bigger impact on economic conditions through the final months of this year and early part of 2026.”
To put the shift in perspective, Ranchhod added:
“Over the past year the one-year mortgage rate has fallen by around 150bps, while the two-year rate is around 240bps lower than in 2023. If you have an average mortgage of around $350,000, that fall could shave around $300 to $400 off your monthly mortgage bill.”
What it means for mortgage brokers
For mortgage advisers, the June quarter data signals a turning point in household financial conditions. Falling debt-servicing costs are freeing up disposable income and improving borrower confidence – a trend likely to continue if RBNZ delivers further easing.
Brokers can expect increased demand for refinancing and debt optimisation, as clients look to:
- Reassess fixed versus floating options
- Consolidate debt while rates remain low
- Leverage improved cashflow to re-enter the housing market
With the economy shifting from recovery to expansion, advisers are well-positioned to guide clients through the next phase of the rate cycle – helping them capitalise on improved affordability and renewed borrower optimism.
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