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Wednesday, May 09, 2007

Banks reduce lending rates

As I predicted earlier on this blog, banks will reduce lending rates from 1 June 2007. Following the lead by Westpac which reduced its lending rates from 1 May 2007 by 0.5%, ANZ Banking Group Limited announced that it will reduce all its lending rates by 0.25% from 1 June. This brings down ANZ's special 1-year fixed rate home loan to an interest rate of 9.75%.

The reduction of lending rates came about after an improvement in bank's liquidity positions when their reserve deposit requirements held on deposit with the Reserve Bank of Fiji was reduced by 1%.

Hopefully, the reduction will not cause another round of increases in the prices of homes and properties which have been at unsustainable levels over the past few years.

Due to a lack of demand and the high interest rates environment, home and property prices have started to come down in recent months.

With a continued improvement in banks' liquidity positions, I would expect lending interest rates to reduce further over the next few months.

Note : Check out the low rates for advertising on our other blog here.

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