30 Jan 2009

Banks seen as too slow at reducing floating rates

6:05 am on 30 January 2009

The Northern Employers & Manufacturers Association says banks are too slow at cutting their floating and overdraft rates.

All of the major retail banks dropped interest rates, after the Reserve Bank cut the Official Cash Rate to 3.5% on Thursday.

The Reserve Bank has lowered the rate from 8.25% since July 2008.

Chief executive Alasdair Thompson says the association is keen to see the Reserve Bank monitor and publish what the banks do to reduce their lending rates.

Mr Thompson says many borrowers are now changing to floating rates when loan periods end, as they expect interest rates to keep falling.

But he says floating rates tend not to come down as fast and cuts to fixed rates don't take effect until the end of a fixed loan period.