AGRIBUSINESS lending rates have started making a more notable tilt downwards after last year's 0.5 per cent cut to the Reserve Bank of Australia's (RBA) cash lending rate.
ANZ's base agribusiness business loan rate has led the way with a 0.35pc drop since December, when the bank also cut its rate by a modest 0.03pc.
The National Farmers' Federation's (NFF) February Agribusiness Loan Monitor - the first for 2012 - has revealed that only the Commonwealth Bank refused to budge on its agribusiness and farm overdraft rates in the last two months.
The Commonwealth's rates were also unchanged in December, although unlike many rural lenders, it did pass on the initial RBA rate cut of 0.25pc in November.
The NFF is taking some pride in the fact that its research with money market analyst Canstar is prompting greater scrutiny of farm lending costs.
"February's monitor shows banks are slowly passing these rate cuts on to their farming and agricultural business customers," said NFF economics committee chairman, John McKillop.
"The monitor was created to provide transparency for farmers to see how banks are adjusting their agribusiness loan rates and to help them make informed decisions about their finances.
"A positive outcome is that banks are now under pressure to ensure they pass on rate cuts to their agricultural customers, and to show that they're doing so in a timely way."
Others monitored by the monthly survey including BananaCoast Credit Union, Bendigo Bank and Suncorp have reduced their term rates by 0.50pc since November, while reductions from other banks varied from 0.25pc to 0.37 percent during this time.
"Some, like the Commonwealth Bank, ANZ, NAB and Suncorp were quick to reduce rates back in November, while others, like BankSA and BankWest are only just passing rate cuts on now - and not necessarily the full 0.50pc," Mr McKillop said.
But rising money costs and subdued inquiry for loans across the board have hurt agribusiness lenders, with Bendigo and Adelaide Bank revealing this week that had not written profitable mortgages in the past few months because of funding costs.
Chief executive Mike Hirst has, however, ruled-out job cuts across the regional bank to lower costs as it copes with a slowing demand for loans.
"The cost of all funding channels have increased markedly over the past six months, including retail term deposits, senior unsecured and secured debt markets," Mr Hirst said.
This trend prompted Bendigo's decision early this month to push through a interest rate rises across its variable mortgage loans.
While the RBA chose to leave interest rates on hold at 4.25pc after November and December cuts, bank customers were now entering an unprecedented time for the sector, said NFF's Mr McKillop.
"A number of rural lenders are taking bold steps to make unilateral changes to their interest rates - rather than aligning interest rate changes to those made by the RBA as has been traditional," he said.
"We may be entering a whole new paradigm in terms of how banks manage their rate decisions.
"It reinforces the need for an ongoing monitoring system like the Agribusiness Loan Monitor, to track rate movements even in those months when the RBA holds rates steady."
Data collected for the NFF/Canstar research is analysed eight business days after the RBA's rate decision.
"This gives banks plenty of time to adjust their agricultural term loan and overdraft rates," Mr McKillop said.
* View the NFF Agribusiness Loan Monitor for February a href="http://www.nff.org.au"> on the NFF website.
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