An economist has warned those who look forward to an all-time low interest rates in New Zealand to "be careful what you wish for".

Cameron Bagrie told The AM Show that, while low or zero interest rates would benefit those still paying off their mortgages, it would also be a sign that the global economy is in a dire state.

"The global financial crisis is a bit of a bellwether in regards to why we had zero interest rates around the globe and they weren't for great reasons.

"Yes we got record low interest rates, [it] wasn't great for savers, [it] was a little bit better environment for borrowers but it was for very bad economic reasons, be careful what you wish for."

However, Bagrie says that interest rates close to zero do look likely in New Zealand as the country follows trends around the world.

"It's a pretty uniform story that interest rates are heading lower around the globe and that reflects the global economy and the global economy at the moment looks pretty fragile."

Already, the effects of a lower Official Cash Rate (OCR) in New Zealand - dropped to 1.5 percent in May - has had marked effects on borrowing trends.

"What we saw when the official cash rate was last cut was that yes, the official cash rate went down, but borrowing rates went down by about half that.

"Some sectors, particularly dairy and construction, are finding it hellishly hard to get credit."

ANZ, New Zealand's largest bank, expects the Reserve Bank of New Zealand to cut the OCR to 1 percent later this year with further cuts likely in 2020.

Bagrie says all this means New Zealand's days of being a high-borrowing country are coming to an end.

"We just don't have the capacity to keep borrowing, we can borrow a little bit but we can't keep borrowing a lot which is what we've done for 30 years."

Newshub.