Fixing or splitting loan act as vaccine for future rise in interest rate
CANNEX released its business banking star ratings report. Small business borrowers looking to safeguard themselves against the negative effects of further interest rate rises are urged to consider full or split fixing of loans in order to rein in the rising cost of debt.
Financial services research group CANNEX has identified interest rates as one area business borrowers can not only control but save money in doing so.
According to CANNEX, businesses that fixed half of their $500,000 loan a year ago would have saved $504 by now, given rate rise. If they had moved to 100% fixed loans like so many residential borrowers have, they would have saved $1,040 over the past year.
It is like a vaccination against future rate increases, as fixing a loan or splitting a loan into fixed and variable components is a reliable method of stabilising outgoings.
CANNEX released its business banking star ratings report which assesses business credit cards, deposit accounts and loans covering residential and commercial lending for both secured and unsecured lending categories.
According to CANNEX, financial institutions these days make it easy for business borrowers to hedge their interest rate bets. 57% of the residential and commercial variable business loans on their database have a split facility and charge nothing to split.
CANNEX researched over 182 loans, 37 credit cards, and 206 transactions and savings accounts for their business banking star ratings report.
They found that the range of interest rates and fees on offer differed substantially and business owners can find a suite of products available for comparison if they are willing to shop around and maybe change lenders.
31-Aug-2007