Ninety-day bank bills, which in the past were an indication of where mortgage rates would head, were now pointing to falling interest rates for at least the next three months, and possibly longer.
The bills have fallen 40% in value since a peak of 2.75% last month and Mr Timms said interest-rate specialists were now factoring in a 40% chance that the next move by the Reserve Bank would be to cut the official cash rate to 2.25% from the current record low of 2.5%.
Mr Timms recently spoke at a function and asked the audience how much they believed they would need in retirement to maintain their current lifestyle.
Most answers were around the $1 million mark, he said.
However, the audience was shocked when he produced the numbers to show what $1 million would produce on an average term deposit.
In 2008, at the peak of the market, the six-month term deposit was an average 8.46%.
On a $1 million deposit, that produced a gross income of $84,600. The official cash rate was 8.25% and inflation was around 3%.
The current average six-month term deposit was 4.38%, giving a gross income of $43,800 on $1 million, more than $40,000 less that a few years ago, Mr Timms said.
The OCR is now 2.5% and inflation is 1.6%.
For many people, the problem had become too difficult to solve, he said.
On a net income of $40,000, or $770 a week, a 49-year-old with no superannuation plan would need to save $530,000 by the time they were 65 to maintain their current income.
However, to do that, they would need to save $659 of their $770 weekly wage to reach that goal.
"The problem we are seeing is that people look at the amount they need to have at retirement and the numbers are so big they throw up their hands and do nothing.
"KiwiSaver has helped but those joining tend to be at the young and old end of the age spectrum.
"Those in their 30s and early 40s are busy bringing up their family, and all that goes with that, and don't have the cash to save."
The NZX-50 had risen steadily this year as people looked to replace income lost as interest rates fell, Mr Timms said.
During the period of 2007 to 2012, the world had suffered through a global financial crisis and New Zealand had seen finance companies fail and investors lose substantial amounts of their retirement savings.
There was no indication interest rates would rise in the near-term.
To fill the gap, people had looked to the improving NZX and shares with a sustainable yield.
While investors were still not prepared to take "risks" with their money, they were more prepared to put their money into the sharemarket, he said.
