Well, it’s been an interesting few months, hasn’t it?
Falling interest rates are starting to translate into cash in borrower bank accounts, while investors (like yourself) are looking for ways to squeeze out better returns. We can practically hear the debates from here.
Interest rates: a local story with global influence
When it comes to global decision-making, that’s a whole other kettle of fish, and we'll leave that for someone else to untangle. What we are seeing is short-term rates dropping, while longer-term rates are holding firm. That’s definitely leaving its mark here at home.
Depositor Compensation Scheme
A pretty big change is coming 1 July with the launch of the Depositor Compensation Scheme, courtesy of the RBNZ.
There are different outcomes for our On-call account versus our Term Investments and Managed Funds. You can join Dave Tyrer's webinar where he will break it all down. Register for the webinar at 12.30pm or 7pm on 20 May 2025.
Open banking: coming ready or not
On 1 May, the new Commerce Minister, Scott Simpson, announced that Cabinet has fast-tracked open banking legislation. You can read more about it in The Post.
Open banking isn’t a magic bullet for market competition (we've said that before), but it will make it easier for innovators like Squirrel to deliver better, smoother experiences for customers. We’ll be leaning into this tech across our business over the next 12 months.
Platform update
We’ve seen strong growth in activity from both investors and borrowers, except in the personal loan space, which continues to be slower than we’d like. We’re still working out our approach here, as we know the wait times haven’t been ideal for personal loan investors.
Our loan portfolio is in good shape and our reserve funds continue to climb. We’ve still got a few over-term construction loans that we’re actively managing. We expect to see improvement over the next 4–6 weeks. Sometimes the best course of action is to leave a loan over-term. It’s also not obvious that the list of over-term loans is changing every month as we resolve things with various borrowers.
Property market: developers stirring, but stock still heavy
We’re seeing early signs of developers reviving projects that have been on ice for a while — a good sign for 2026. That said, there’s still a hefty amount of housing stock for sale.
ANZ recently downgraded their house price growth forecast for the year. We think they’re being a tad optimistic, given the oversupply. Low interest rates usually boost house price growth, but uncertainty and job security concerns are still putting the brakes on.
A Trans-Tasman thought...
An interesting thought is that housing costs in Australia have been climbing steadily post-COVID, whereas in NZ, they’ve dropped and then remained flat.
Makes you wonder at what point does the cost of housing start to influence those considering a move to the ‘lucky country’? 🇦🇺
We hope house prices stay flat for a while yet. It’s better for New Zealand if they grow in line with wages and GDP — not ahead of them.