Farmers relaxed over impact of third OCR hike

19:04, Jun 12 2014
National Fieldays
Kris Fannin of Cambridge fixes up a tent on the Contractors Federation site blown down by strong winds over night at National Fieldays at Mystery Creek.
National Fieldays
The sun shines on the early starters on the first day of the 2014 National Fieldays at Mystery Creek.
National Fieldays
After a stormy night, the sun shines over the first day 2014 National Fieldays at Mystery Creek.
National Fieldays
The weather was bleak on the eve of the 2014 National Fieldays at Mystery Creek.
National Fieldays
Josie Yockney wears her trusty gumboots to get through wet conditions on the eve of the 2014 National Fieldays at Mystery Creek.
National Fieldays
Leaning into the wind from a bank above the National Agricultural Fieldays site are, from right, Matamata lads Taylor Green, 19, Zach Bell, 18 and Daniel Phillips, 20.
Rural bachelors
Pretty boys: Rural bachelors contestants, from left, Michael Paton, Jimmy Bentham, Josh Gilbert, Brett Steeghs and Thomas Denham during a question and answer session.
National Agricultural Fieldays at Mystery Creek.
Boys with free stuff: Rhys Kimber, Matt Hanson and Sam Smith, all 15 and from Kristin School in Auckland, enjoy the National Agricultural Fieldays at Mystery Creek.
National Agricultural Fieldays at Mystery Creek.
Thumbs up: Zac Gillespie of Inglewood gets his pic taken by Ebony de Thierry in front of a Westpac Rescue Helicopter at the National Agricultural Fieldays at Mystery Creek.
National Agricultural Fieldays 2014
Prime Minister John Key tries out a Honda quad bike at the National Agricultural Fieldays at Mystery Creek.
National Agricultural Fieldays 2014
Korey Knudsen, 18 months old, tries out an interesting display at the Stoney Creek site at the National Agricultural Fieldays at Mystery Creek.
National Agricultural Fieldays 2014
Holly Duggan gets a pic to remember with Prime Minister John Key at the National Agricultural Fieldays at Mystery Creek.

The rural crowd at the Fieldays say they will take the third Official Cash Rate hike this year on the chin, despite high levels of farm debt.

The Reserve Bank yesterday announced a rise of 0.25 per cent, taking the OCR to 3.25 per cent.

That will hit homeowners, with some banks already announcing a corresponding lift in floating interest rates. It will also probably hit farmers, with the bank last month estimating 70 per cent of the $32 billion worth of dairy-farm debt is in floating mortgage rates.

2014 National Fieldays
Tyler Wetere, 8, complete with goodies bag around this neck, negotiates a walkway at the 2014 National Fieldays at Mystery Creek.
2014 National Fieldays
Little Angus Leigh-Mackenzie appears well-equipped to help with chainsawing displays at the 2014 National Fieldays at Mystery Creek.
2014 National Fieldays
Mark Birks, 5, gets some digger driving advice from Alistair McIntyre at the 2014 National Fieldays at Mystery Creek.
2014 National Fieldays
Pumps were needed after heavy overnight at the 2014 National Fieldays at Mystery Creek.
2014 National Fieldays
Sophie Robinson and Jared Suisted at the 2014 National Fieldays at Mystery Creek.
2014 National Fieldays
Gumboots and umbrellas were necessary fashion accessories on day two of the 2014 National Fieldays at Mystery Creek.
2014 National Fieldays
Mark Lambert carries a post hole borer in the fencing competition at the 2014 National Fieldays at Mystery Creek.
2014 National Fieldays
Shane, Aimee, Tommy and Michelle Lawson from Okaihau Bay of Islands are dressed for the inclement weather at the 2014 National Fieldays at Mystery Creek. at the 2014 National Fieldays at Mystery Creek.
2014 National Fieldays
Sam, Nathan, Amanda and Maxwell Flowerday of Tauranga at dressed for the conditions at the 2014 National Fieldays at Mystery Creek.
2014 National Fieldays
Nick Lieftieng and Tim Stafford compete in the early stages of the national fencing championships at the 2014 National Fieldays at Mystery Creek. Hamilton.
2014 National Fieldays
Tim Stafford and Nick Lieftieng compete in the early stages of the national fencing championships at the 2014 National Fieldays at Mystery Creek. Hamilton.

However, cockies at the Fieldays weren't fazed by the announcement.

Murray Hawkings from Matamata said farmers were "pretty adept" with finances, and would be keeping an eye on interest rates. Most "have got their debt covered now by fixed rates".

Hawkings said those he knew were being conservative.

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 Ag Art Wear Show at the 2014 National Fieldays at Mystery Creek.
A Brontie Birchall-designed outfit on the runway for the Ag Art Wear Show at the 2014 National Fieldays at Mystery Creek.
 Ag Art Wear Show at the 2014 National Fieldays at Mystery Creek.
A Sandra Guest-designed outfit on the runway for the Ag Art Wear Show at the 2014 National Fieldays at Mystery Creek.
 Ag Art Wear Show at the 2014 National Fieldays at Mystery Creek.
A Mercia Paaymans-designed outfit on the runway for the Ag Art Wear Show at the 2014 National Fieldays at Mystery Creek.
 Ag Art Wear Show at the 2014 National Fieldays at Mystery Creek.
An outfit on the runway for the Ag Art Wear Show at the 2014 National Fieldays at Mystery Creek.
 Ag Art Wear Show at the 2014 National Fieldays at Mystery Creek.
A Sandra East-designed outfit on the runway for the Ag Art Wear Show at the 2014 National Fieldays at Mystery Creek.
Ag Art Wear entry is paraded at the 2014 National Fieldays at Mystery Creek.
Ag Art Wear entry is paraded at the 2014 National Fieldays at Mystery Creek.
Ag Art Wear entry is paraded at the 2014 National Fieldays at Mystery Creek.
Ag Art Wear entry is paraded at the 2014 National Fieldays at Mystery Creek.
Ag Art Wear entry is paraded at the 2014 National Fieldays at Mystery Creek.
Ag Art Wear entry is paraded at the 2014 National Fieldays at Mystery Creek.
Ag Art Wear entry is paraded at the 2014 National Fieldays at Mystery Creek.
Ag Art Wear entry is paraded at the 2014 National Fieldays at Mystery Creek.
Ag Art Wear entry is paraded at the 2014 National Fieldays at Mystery Creek.
Ag Art Wear entry is paraded at the 2014 National Fieldays at Mystery Creek.
Ag Art Wear entry is paraded at the 2014 National Fieldays at Mystery Creek.
Ag Art Wear entry is paraded at the 2014 National Fieldays at Mystery Creek.
Ag Art Wear entry is paraded at the 2014 National Fieldays at Mystery Creek.
Ag Art Wear entry is paraded at the 2014 National Fieldays at Mystery Creek.

"We just came through the GFC [Global Financial Crisis], so there's still a bit of caution there," he said.

"Farming is a long-term thing, not just a year at a time."

Horowhenua farmer Paul Dowdle said he didn't have a lot of debt, and interest rates were still historically low. "Coming from when interest rates were much higher, it doesn't look that high."

ANZ rural economist Con Williams said he was "optimistic", despite the high risk in the dairy sector should interest rates pick up.

He said farmers' return on investment had been high over the past couple of years, making it a good time to invest.

However, homeowners have nowhere to run, with fixed rates also expected to climb, ending the run of "special" deals in recent weeks.

The central bank's past two increases have seen banks move quickly to hike floating mortgage rates, which are closely tied to the OCR.

Shortly after the announcement, ANZ said it would raise its floating and flexible rates by 0.25 percentage points this month.

Longer-term fixed mortgages are more closely related to "swap rates", which have already largely priced in the expected series of hikes.

The Co-operative Bank chief executive Bruce McLachlan said: "You're definitely going to see the floating rates go up."

This time there was likely to be some movement in fixed rates, too.

Westpac chief economist Dominick Stephens agreed, saying financial markets had been skeptical of the Reserve Bank's resolve.

"That had caused a drop in fixed-mortgage rates and produced an opportunity to fix," he said. "I think that opportunity will rapidly disappear following today's statement."

Waikato Times