Reserve Bank of New Zealand statistics for bank lending in January show farm lending fell for the third month in the last four months.
Business lending rose for the second month in succession after falling sharply for most of the last year, the figures show.
Household lending rose in January after falling in December for the first time since the Reserve Bank started keeping such records in 1998. See more here from Gareth Vaugahan on last month's sector credit figures.
Lending for agriculture fell NZ$7 million in the month to NZ$47.803 billion and is down from a record high of NZ$48.262 billion in September last year. It was still up 1.2% from a year ago, but the annual growth is down from 6.9% the previous year and 22.9% the year before that.
Lending for households rose NZ$230 million to NZ$183.269 billion in January and was up 1.6% on January 2010. The annual growth rate is down from growth of 2.9% the previous year and 3.8% growth the year before that. Total household lending rose 0.1% in seasonally adjusted terms for the month after two months of being flat.
Within this category of lending, housing (mortgage) lending rose NZ$393 million to NZ$171.345 million, while consumer lending (credit cards and consumer finance) fell NZ$73 million to NZ$11.924 billion.
Lending for businesses rose NZ$267 million to NZ$73.310 billion, but remains down 2.2% from a year ago, which compared with a fall the previous year of 6.9% and growth the year before that of 11.6%.
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6 Comments
Makes a mockery of all the spin and bs the banks have published lately about how they are here to support rural sector . Rural lending down, so what are the banks going to do, force more sales to further reduce land values to 1970 values and then wait for new people to enter in the market. Who is going to be left to carry on farming?
Interesting spin on it Janette, seems to me that the biggest portion of the debt is in the Dairy sector and given the solid payout forecast and a season that in most areas while not great is not too bad, that farmers are generating a profit and paying down some debt. Surely this is a good thing for their balance sheets given that the bubble has burst in most property sectors.
I really would have thought this was a good thing, but obviously not only the evil banks that like to put spin on things.
Chuck I know what I am talking about as I have just sold my farm and If you are implying that I am putting a spin on things to do with rural sector debt have a good look at banks disclosure docs and see the level of impaired debt and despite the higher payout etc banks are still forcing farmers to sell. As usual people that have no knowledge of the rural sector think that farming in this country is only about Dairy sector business. What people like you don't understand is that as land prices fall more and more farmers have debt equity issues which compounds the problem.If you are interested in getting a good overview of things rural have a look at sector report Part one and two Country 99TV.While you are at it read Basel II accord and Basel III and maybe some reserve bank articles in the Bulletin.
Janette,While i sympathise with your current position and admire you for having a go at farming in Pongaroa (a tough assignment in recent years)..I am not sure what you are suggesting....Did you think the debt fuelled land price party would go on for ever?
1. The farming sector is carrying too much debt.It is not suprising that banks are tightening the credit given this fact.
2.Land prices need to fall.It is better to spend farm incomes on fencing/fertiliser/development ...than giving it all to the Aussie banks as interest
3 High land values that are out of balance with incomes prevent the next generation of farmers from entering the industry
The point I was trying to make was that there is a bigger picture here, the gfc, banks disclosures,the effect on the economy, uncertainty about future commodity prices, a sheep and beef sector still looking for better industry solutions, and rising costs of production. Banks were lending to get market share and yes some people over borrowed but there are a lot of farmers that are working extremely hard and are getting no where and bank pressure is making it even harder with clamps put on so their productive base is shrinking.
Had a phone call this morning 3 farms for sale and local bank managers put through offers for credit control to approve and all three turned down. The local guys thought they had put together a viable package.I know of many young people that are being turned of farming as an opportunity because of the lack of certainty in the job.Some of the tenders I got were scaringly low and if that is an indication of where farm values are going to fall too then famers will have lost 60% equity and as a country can we allow that to happen. People that have equity at 30% will then find their equity shrinking and another lot of landowners will have banks breathing down their necks.
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