Stimulating Decision For Business

Newcastle Herald

Wednesday December 3, 2008

By GREG WENDT Business Editor

REGIONAL business groups supported the 100 basis point drop in official interest rates yesterday, but slammed banks over credit rationing and the cost of business loans.

Hunter Business Chamber said reducing interest rates was having the desired effect of stimulating the housing sector.

The cash rate of 4.25 per cent was the lowest since May 2002 and was well received by the business community.

Chamber chief executive Peter Shinnick said that at a time when indicators for manufacturing and investment were declining, a housing-led recovery could help avert a recession in the Hunter's economy.

Mr Shinnick said housing activity was one of the major contributors to the national economy but had been in the doldrums for several years.

Recent activity in the sector was buoyed by the increases in first-home owner grants.

Mr Shinnick said the chamber was concerned about the high rates banks charged for business loans.

Property development industry group Urban Taskforce said banks had to resume their lending for development projects.

Urban Taskforce chief executive Aaron Gadiel said lower interest rates would stimulate demand, but getting a supply of new houses was also essential.

© 2008 Newcastle Herald

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