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BNZ says falling interest rates will put $2.2 billion dollars into the pockets of New Zealanders with mortgages over the six months to a year.
Home loan rates have been steadily dropping since about this time last year.
The official cash rate has fallen from a peak of 5.5 percent to 3.5 percent.
The average two-year special home loan rate has dropped from just under 7 percent to 5 percent.
But BNZ chief economist Mike Jones said the impact of that was not felt in household budgets immediately.
People would get the benefit when it came time to refix their home loans, and that was likely to flow through over the coming months.
"It takes a while for those lower rates we've been seeing over the past six months or so to flow through to householder or mortgage borrower pockets so most of the cashflow is still to come," he told RNZ's Nine to Noon.
"That's partly why we are still in this relatively soggy economy. The cash flow ahead of us hasn't come through yet."
He said where the money was spent would be an important question for the country.
Keeping up with bills would soak up some of it, he said, but there could also be an increase in discretionary spending.
"Households have been sacrificing in those areas to keep paying the bills. With that cashflow coming in, maybe a bit more of that goes into hospitality spending, travel, tourism, bits and pieces like that. Not a rush but more than we are seeing today," Jones said.
He said there were also factors that could make people nervous and more likely to be conservative about spending, such as concerns about the labour market and worries about international disruption.
"What we see is that any category that has some discretionary element to it has been one that people have pulled back on - durables, hospitality, travel.
"We've seen spending on things like utilities, government charges, health and education much stronger. That's not something that we expect to see reverse very quickly but there may be a bit more going into discretionary areas."
He said, while inflation had fallen, it still cast a "long shadow" over consumer behaviour.
Even with the extra money for households and some strength in the rural economy, Jones said he expected economic growth to be "slow and low".
But overall the positives would just outweigh the negatives. "It's quite a change from last year when we saw quite a nasty recession through the middle of the year."
Jones said he still expected the official cash rate to drop to a low of 2.75 percent.
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