6 Dec 2008

Federated Farmers wants cut in OCR passed on

3:45 pm on 6 December 2008

Federated Farmers says banks must pass on the benefits of the latest cut in the Official Cash Rate to rural customers.

Even though the OCR is down 3.25 percentage points since July, dairy vice chair John Bluett says farmers have not seen the benefits.

The rate is now at its lowest level in five years.

Mr Bluett says banks have been protecting profit margins in uncertain economic times, but should now pass on Thursday's cut of 1.5 percentage points by the Reserve Bank to 5%.

He says that could save the average dairy farmer, with a mortgage of $1.5 million, up to $22,000 per year.

Mr Bluett says farmers on fixed rates will miss out on any new interest cuts until their mortgages are due for renewal.