Rabobank reduces interest rates on rural loans

Rabobank New Zealand has announced it will lower the variable base rate on its rural loans by 1.5% per annum, effective February 13, 2009.

Rabobank general manager Rural New Zealand Ben Russell said the bank had moved to pass on this interest rate reduction to its clients following the Reserve Bank of New Zealand’s decision to reduce the official cash rate (OCR) by 1.5% per annum today.

Mr Russell said that in addition to this reduction in the bank’s variable base rate, Rabobank’s fixed rates have been falling steadily over recent weeks, as the outlook for the global economy deteriorated and wholesale markets priced in a significant cut in the OCR.

Available interest rates to Rabobank clients have now fallen by at least 4% since rates peaked in early 2008.

“Rabobank interest rates for the vast majority of our clients with good credit history are highly competitive with, or lower than, the home mortgage interest rates offered by the major banks,” Mr Russell said.

“This translates to significant savings in interest costs for farmers, at a time when farm gate prices for a number of rural commodities, particularly dairy, have fallen sharply.”

Mr Russell said despite the current market volatility, Rabobank remained confident about the medium to long-term outlook for the major rural commodities, and in the ability of farmers to adapt to changing market circumstances.

“Volatility in commodity markets and seasons has always been a part of farming. While the current market conditions are particularly challenging in a number of sectors, lower interest rates, fuel, fertiliser and chemical costs, and a lower New Zealand currency are all factors that will assist farmers in mitigating the impact of lower commodity prices,” he said.

“Many farmers will review their cost structures and defer or cut unnecessary expenditure, and find the opportunity to make cost savings. Those farmers concerned about their financial position should make early contact with their professional advisers and banks to evaluate their position, and what options they have.

“While rural commodities have certainly been impacted by the global market conditions, Rabobank believes that agriculture will generally be less affected than other industries dependent on more discretionary consumer spending, and the long-term outlook remains very positive.”

Mr Russell said Rabobank remained in a strong position to help support the New Zealand agricultural sector with its lending requirements.

“Rabobank operates in 43 countries and its cooperative ownership and structure also adds to the bank’s solid position in times of market unrest. Rabobank was founded as a farmers’ cooperative more than 110 years ago and is still structured and run as a cooperative,” he said.

ENDS

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