Friday, July 18, 2008

NZ lending rates could go even higher

Looking forward to lower lending rates in the near future? Don't hold your breath.

As the country waits for next week's announcement by the Reserve Bank, which could include a cut in official interest rates, the BNZ is warning that banks' lending rates could go even higher, because of the global credit crisis.

BNZ economist Craig Ebert says 20 percent to 25 percent of funding for the New Zealand banking sector comes from offshore, and that overseas markets are "charging a pretty penny" for the money because of the credit crunch.

"The fact of the matter is, global money has become as expensive for NZ banks as it's been in many a year," Mr Ebert said today.

"...While all and sundry are looking forward to falling interest rates, we are worried that term retail rates might have to go up - and stay there for a good while to come."

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