The Regional Investment Corporation’s (RIC) variable interest rate is set to change on 1 August from 1.77 per cent to 2.17 per cent in line with a rise in the Commonwealth 10-year bond rate.
RIC CEO Bruce King said the RIC is an attractive option for new farmers, established farmers and succession planning with almost all existing customers not affected by the change due to their interest free terms.
“For new loan applications the terms provide five years’ interest only followed by five years’ principal and interest payments over a 10-year loan term, there are also no fees or charges, including for early repayment.
“For more than 98 per cent of existing RIC customers currently in the interest free period of their loans, nothing will change,” said Mr King.
“These customers will start paying interest at the variable rate in effect when their interest-free period ends.”
Mr King said the interest rate was based on two components outlined in the RIC’s Operating Mandate.
“The RIC’s Operating Mandate requires the RIC’s interest rate covers the RIC’s administrative costs to deliver concessional loans and the Commonwealth’s borrowing costs. The borrowing costs are calculated based on a six-month average of the Commonwealth 10-year bond rate,” he said.