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Lower Interest Rates Grows Business Loans Too

April 14, 2015

Due to low interest rates there is a boost in loans for business and investment over the past year. Lending finance figures collected from ABS show commercial lending – loans for business or investment purposes – rose 9.6 per cent in the year to February, despite having fallen one per cent in the month.

The figures showed low interest rates were having an impact, but commercial lending would need to lift further this year to help boost economic growth”, said Michael Workman, senior economist at Commonwealth Bank.

Low interest rates do work,” Mr Workman said.

Commonwealth Bank expects another rate cut by the Reserve Bank in May.

Mr Workman said, “The parts of commercial finance showing the strongest reaction to low rates were connected to property and construction activity, with “signs of life” in other sectors too”.

He further added, “Recent comments from the RBA on the business credit pick up supports the view that business investment, outside of the mining sector, is picking up“.

Meanwhile, the National Australia Bank monthly business survey on Tuesday showed business conditions lifted from two to an above-average six points in March – one of its strongest results in years.

News Source: http://www.theaustralian.com.au/news/latest-news/business-loan-growth-shows-low-rates-work/story-fn3dxity-1227303450450

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