Home buyers are cheering the latest interest rate cut, but for savers it is more bad news.

The Press spoke to two Christchurch people hit by falling interest on their savings.

Rebecca Taylor, 28, a graphic designer, began saving in 2003 after returning from Britain.

After Reserve Bank Governor Alan Bollard's decision yesterday to cut the official cash rate (OCR) to 3 per cent, her money is earning less than ever.

Her primary saving motivation was to buy a house.

However, she estimates that with the OCR plummeting over the past year, she is losing more than $1000 a year.

"I was bringing in over $225 a month in interest, and now it is down to just over $100. It's quite a drop," Taylor said.

"This latest cut just makes me a little more unsure of what to do with my savings.

"Even though I have a deposit, will I even be able to gain a mortgage? Should I look at investing it?

"In the current climate of economic uncertainty this is a scary thought and, personally, I don't see it as an option for me at the moment. The third option is: keep my money in the bank and just wait and see."

She is favouring the third option, while monitoring the property market.

Craig Myles, director of Myles Wealth Management, said Taylor was safer keeping money in the bank, particularly if she intended to use it to buy property.

"The key question to ask is what is the purpose of the money and if a person has a near-term purpose such as looking to buy a property, then they need to keep their money in an asset that is likely to perform over the near term and that's probably most likely to be in the bank.

"Anything else and you have uncertainty about what the value of the investment might be in two years' time. So, for example, buying a negotiable fixed-interest security is not the right thing to do because the price of that security might change over that two-year period, and that includes government bonds and local authority stock, for example."

So, should people invest in property now?

"That depends on the individual's circumstances, but if someone is looking to buy a house, which we wouldn't regard as an investment, more of a lifestyle asset, clearly houses are getting cheaper," Myles said.

"Whether they will get cheaper again, there is a lot of speculation.

"Mortgage rates will be at all-time lows over coming months and that'll be part of people's considerations."

Peter Little, 78, a retired doctor, set up the renal unit in Christchurch in the 1970s.

However, at the end of the decade he went to work overseas to build up a retirement nest egg.

He has returned to New Zealand to enjoy his retirement but the drop in the cash rate and subsequent interest rate drop have hit his finances.

"It's frustrating. We were urged to save and we saved for our retirement and it was reasonably comfortable and because of other people's greed, we're now running into problems.

"All my bank deposits are now earning less than inflation which means my disposable income has reduced considerably and now I have to plan carefully and start using capital. I know on my bank deposits the interest rate has about halved in the last four months."

He planned to keep money in the bank and, eventually, look at buying shares to offset the effect of inflation.

Retirement Commissioner Diana Crossan warned investors to "do their homework" before putting their cash into finance products offering high rates of return.

"In this low interest rate environment, people need to look beyond the advertising as new investment offers come onto the market.

"Don't be blinded by the offer of a high return."

All investments carried a level of risk, she cautioned.