Floating mortgage rates could be costing farmers millions

Federated Farmers has commenced a series of meetings with the major trading banks to get to the bottom of the interest rates being paid by farm businesses.

“The Federation has stopped ‘hand bagging’ the banks to talk direct to them,” says Don Nicolson, Federated Farmers President.

“Right now the biggest cost input that can offer immediate relief is interest rates. If we follow the Reserve Bank’s latest report there is potentially millions of dollars in relief available.

“The Reserve Bank has identified that floating mortgage rates are higher than they could be. Federated Farmers economists estimate that floating rates account for about $6.6 billion of the $45 billion rural debt. Each percentage point cut to floating rates puts $66 million back into the pockets of farmers.

“This is a key motivating factor in meeting with the banks. The Federation also wants to ensure the banks continue to support agriculture in these tough times.

“We want a better understanding of how the banks are funded with a view to ensuring the interest rates paid by farmers are equitable. More so, given there appears to be a difference between the Reserve Bank and the trading banks.

“The Federation understandably wishes to ensure as much money as possible is kept on-farm. This allows for greater investment in farm productivity, ensuring farms are well placed for recovery.

“It really is in everyone’s best interests,” Mr Nicolson concluded.