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Lowest interest rates ever, for all but the WDC

AUTHOR Frank Newman DATE 30 Nov 2019

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The government is currently borrowing money at 1.3%.

Property investors are paying under 3.5% for mortgage money.

The Mayor says the Whangarei District Council's debt is $142m. The 2019 Annual Report (page 94) shows Councils financing costs were $7.5m. So that's 5.3%. If the Mayor continues to state the debt is $142m, then why is the Council paying 5.3% interest?

The Council no longer has a finance committee, so it is now for the Mayor to explain.

If the debt is actually $224m (external and internal) as I have stated then the interest rate would be 3.3%. That makes more sense but it’s still more than one could reasonably expect.

While the Mayor is clarifying the debt figure can she also explain why the council has $242m in derivative contracts? Why has the Council hedged against rising interest rates when no-one, no-one, has been predicting interest rate rises for many years now. On a year by year basis for the last five years, has the Council better or worse off financially as a result of having the derivative contracts?

We look forward to the Mayor's response.

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