Picture looking rosy for borrowers

Business owners can now be confident of stability.

The Reserve Bank last week announced the official cash rate (OCR) would remain at 3.5 per cent.

It also suggested the next movement could even be a reduction. This has led economists to make predictions but largely all agreeing that we could see the current rate put on hold until mid to late 2016.

This has now led to banks lowering their mortgage rates and a mortgage war is predicted. Oil prices, while increasing slightly, are still well below where they have been and inflation rates are also decreasing.

So what does this mean for us in Rotorua and the local business environment?

Put simply it is all good news. The local economy is picking up so too is business confidence. Reductions in Bank lending rates and a general reduction in inflation means that there will be more cash surplus's to business and personal cash flows.

Business owners can now be confident of stability and can now borrow to do the projects they had put on hold. It is also a very good time to review your current business debt and ensure you are getting the best rates available and restructure your debt where needed.

Obviously if you have fixed rate loans you are committed to ride these out.

All banks apply mortgage rates to business lending where residential dwellings have been given as security and is a very cheap form of business borrowing. There are different points of view in this regard, largely about protecting assets but all banks generally take guarantees to tie in mortgage security the hold so just ensure you are getting the business mortgage rates.

By restructuring your debt on lower rates and shortening the term you save dramatically on interest cost " similarly if you reduce the interest rate and put the term out over a longer period you will reduce your payments and put more cash back into your cash flow.

With business confidence on the rise and more cash surplus being recorded, local spending will continue to increase.

I have said it before and I'll say it again, the signs are all there for a good 2015 and even the banks will see some activity which is a very positive sign.

-Darrin Walsh is chief executive of the Rotorua Chamber of Commerce.