MP's claim on rates rejected

Wairarapa MP John Hayes' assertion that farmers are being gouged by banks' high interest rates has been rebuffed by Federated Farmers.

Mr Hayes questioned Finance Minister Bill English about the impact of high interest rates on the local economy during a meeting of Parliament's finance and expenditure committee last week.

He said Wairarapa farmers were being particularly hard hit.

Federated Farmers Wairarapa president Jamie Falloon said the banking sector was competitive.

"If people are paying too much they have got a good opportunity to take it to other banks. Banks are competing for customers, so now is the time."

Mr Falloon said businesses usually pay a "little bit more" interest on loans than home mortgages, to cover the higher risks involved, but that there were smart ways to keep debt under control. "Get some advice on how to structure your debt so you're paying low rates."

Action taken by central government to ensure farmers were not paying high interest rates would be a step back to the 1980s, said Mr Falloon.