J Mitchell: ‘Horrible shock’ after repayment holiday

Saturday April 04, 2020 Published in Letters to the Editor
ANZ Bank in Avarua. 19071410 ANZ Bank in Avarua. 19071410

Dear editor, I note with interest the welcome comments from the Deputy Prime Minister last week with respect to the need for the commercial banks operating here on the island to do more in assisting our people during this time of real hardship.

I thought I would check in to see what their other branches were doing elsewhere in the Pacific.

ANZ in New Zealand recently announced it would pass on the full 0.75 per cent Official Cash Rate cut by the Reserve Bank of New Zealand RBNZ to its floating and Flexi home loans rates.

The floating home loan rate will drop from 5.19% to 4.44% while the Flexi rate will drop from 5.30 per cent to 4.55 per cent. The new rates took effect last month.

So while it is great that they have passed on the full .75 per cent cash rate cut to their customers in New Zealand, I note that they have not frozen or “paused” their interest rate charges.

In New Zealand this might be ok because their interest rates are quite low to begin with (a full 4 per cent lower than is offered here!), and the New Zealand Government support package is extremely generous – we obviously cannot afford to match that kind of support here in the Cook Islands.

So while we have the ability to “pause” our loan repayments here in the Cook Islands, I wonder what kind of debt burden the average borrowing family will have when we eventually come out of this crisis, given the banks are still busily charging their extortionate interest rates without any such pause.

I suspect some people will be in for a horrible shock.

Something has to give here, Mr Editor, as we don't have any Reserve Bank or any other means to control these interest rates. Time for the banks to get serious methinks.



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