Local-body interest rates up

Press, 20 April 1979, Page 2

Local-body interest rates up

rA weuingion i Higher interest rates for local authorities loans were announced yesterday by the Prime Minister and Minister of Finance (Mr Muldoon). The new rates, set after last week’s announcement of higher rates for central government borrowing, apply immediately. The rate for one-year terms goes up from 9.5 per cent to 11.5 per cent and the rate i for six-year terms is up from s 10.5 per cent to 13.5 per cent.

Terms of 10 years and more will have a rate of 11.25 per cent compared with the present 10.5 per cent.

Mr Muldoon said the new rates were intended to maintain competitive margins for local authority stock compared with the new rates for Government stock.

The interest rates should be compared with the rate of inflation to see if the lender was receiving an adequate after-tax reward, he said. The new rates, with the previous ones in brackets, are: one year, 11.5 (9.5); five years, 11.5 (10); three years, 12.5 '(10.24); four years, 12.5 (10.24); five years, 12.5 (10.24); six years, 13 (10.5); seven to nine years, 12 (10.5); 10 years, 11.25 (10.5) and over. Social Credit’s economic affairs spokesman (Mr L. Hunter) said the increased in- ' terest rates would cripple further community development and “send rates through the roof.” All that was wrong with the Government’s previous financial policy was now being magnified on a large

scale by further embroiling local bodies in the moneylenders’ net, he said. “Previous interest charges have doomed most families from owning their own homes because they could not service the mortgage charges,” Mr Hunter said.

Now, through rates, all houses, whether rented or owned, would have to pay the cost of increased interest because of rates increasing to service the cost of a more expensive local-body debt.