Rates hike ‘another blow to small businesses’ says Business SA
Yesterday’s decision to raise interest rates yet again will cause headaches for small businesses according to the South Australian Chamber of Commerce.
The peak body for businesses in South Australia says the RBA’s move to raise interest rates by another 25 basis points will be “yet another blow to small businesses”.
As such, Business SA CEO Andrew Kay said he hoped the state government will come up with measures to address the “difficult conditions” businesses are under when it releases the state budget next week.
“Businesses are copping it from both directions as demand slows and costs increase. Increased mortgage stress on households will continue to drive demand down, particularly in sectors like retail and hospitality that rely on discretionary spending from consumers,” Kay said.
“Paired with last week’s 5.75 per cent increase to minimum wages and awards, and a 0.50 per cent increase to superannuation effective from July 1, it’s clear that businesses are going to be faced with tough decisions.
“We hope that next week’s state government budget will provide some relief for small business owners to help navigate the difficult conditions in the months ahead.”
Meanwhile, the Australian Banking Association (ABA) said the move addresses the nation’s inflation challenge impacting Australian households.
It has also encouraged bank customers who are concerned about their financial situation to “shop around” and says competition in the banking sector is strong with continuing record levels of mortgage refinancing.
“Banks strongly encourage any customers experiencing financial difficulty to reach out to access bank support services and to do so as early as possible,” the ABA said.
“Bank support teams are also proactively communicating with those customers at risk. Banks can assist customers by restructuring loans, offering interest-only payments, extending the term of a loan and offering payment deferrals.
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“Australians have record levels of savings sitting in deposit and offset accounts while arrears remain at low levels. In April 2023 the value of household deposits on the books of ADIs grew for the 23rd month in a row, to $1.373 trillion.”
Of the Big Four banks, Westpac (ASX: WBC) is the first to pass on the rate hike to customers, with home loan variable interest rates increasing by 0.25 per cent per annum for new and existing customers from 20 June.
“We understand interest rate increases put more pressure on household budgets. The majority of our customers are managing okay, but we know with each rate change it’s getting more challenging,” Westpac chief executive consumer and business banking Chris de Bruin said.
“We’re reaching out to some customers who may need additional support and have competitive rates available for those rolling off fixed loans to make the change easier.
“For customers in financial difficulty we are here to help and encourage them to call us early if they’re concerned.”
