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Farmers Must Fix Now! - Finance Specialist!

If they haven’t already done so, farmers should take immediate action to “fix” mortgage rates, according to farm finance specialist Donald Fraser.

“The latest Reserve Bank rise confirms that base interest rates are trending upwards, and it’s important that farmers now take advantage of the best rates on offer”, says Fraser.

“A good strategy is to fix a substantial proportion of their floating-rate loans for perhaps a couple of years. This is especially true for farmers with a large debt load, and will help minimise the effect of rises in the cost of borrowing and reduce downside risks.”

Fraser believes that strong business confidence in New Zealand together with signs of an improving world economy mean that interest rates are not likely to return to low levels in a hurry.

“Historically, one of the best indicators of recovery in world farm trade is rising wool prices, and we have seen these increase recently. From the New Zealand farmer’s point of view, now is the time to secure fixed interest rates and put greater certainty into the cost of debt servicing,” says Fraser. * * *

Donald Fraser is a Waikato-based financial adviser to the rural sector.

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