Moodys says a lack of domestic savings was a factor in its decision to downgrade the credit ratings of the four main banks.
The agency has cut the credit ratings of BNZ, ASB, Westpac and ANZ National in a move that could increase mortgage rates.
The downgrade reflects continuing weakness in the economy, undermining the quality of the banks' loan books.
Moody's analyst Marina Ip says an over-reliance on foreign borrowings was also a negative for the banks.
She says funding loans from overseas increases the risks banks face of a credit crunch if the world economy worsens.
Massey University banking lecturer David Tripe says the full impact of the downgrade on mortgage rates won't be known until the banks borrow on offshore money markets again.