STATE ADVANCES

Evening Star, Issue 22458, 1 October 1936, Page 6

STATE ADVANCES

RECORD OF CORPORATION'S YEAR SUBSTANTIAL IMPROVEMENT IN INTEREST PAYMENTS £4,000,000 LOANED UP TO JUKE [From Our Pari.iamextary Reporter.] WELLINGTON, September .'iO. A total of 4,131 applications for loans was received by the Mortgage Corporation of New Zealand, now the State Advances Corporation, during the period from September last year, when active lending operations started, to March 31 of this year. This is revealed in the annual report of the chairman of the corporation, which was tabled in the House of Representatives to-day by the Minister of Finance (the Hon. Nash). Of that total 2,098 were classed as residential applications and 2.033 were for farm loans. The total amount of loans applied for under all headings was £6,313,925, and of that sum £4,582,300 involved application for farm loans. The loans which were authorised and the amounts in each, case were as fol-

Tho Board of Management declined 518 applications for loans totalling £726,055. The report points out that in addition to the applications declined after detailed consideration a large number were obviously unsuitable and did not merit detailed reports. The applications declined as unsuitable were as follow: No. Account. Residential 515 £017,425 Farms 566 1,280,829 Applications aggregating approximately £1,034,000 were being investigated at March 31, 1936. Dealing with the policy followed in the lending operations of the corporation, the report states that the provision in the Mortgage Corporation Act allowing the board to make advances in excess of a two-thirds margain subject to a guarantee by the Minister of Finance had been found very useful and helpful in practice. Reference is also made to the adjustment of approximately 44,000 mortgages, which _ the report describes as a work of considerable magnitude. Offers of adjustment had now been made practically to all mortgagors, and up to March 31, 1936, mortgagors to the number of 17,296 had signified their acceptance, and their accounts had been adjusted accordingly. The 'board had decided that advantage should be taken of the opportunity of capitalising arrears and thus giving mortgagors a fresh start. Normally, the capitalisation of arrears would have resulted in increased halfyearly payments under the mortgage, but this tendency . had been offset wherever possible by .ah extension' .of the term of the mortgage. The aim had been to place mortgagors in such a position that, notwithstanding capitalisation, the half-yearly payments had been reduced rather than increased. The board was hopeful that, as a result' of these concessions, mortgagors would in future be more able to meet their obligations to the corporation.

Referring to the interest due. in respect of mortgaged securities other than local body securities, , the report states that tho position has shown a marked improvement during the last three years. The percentage of receipts to interest due in 1933-34 was 79.48, in 1934-35 89.43, and for the eight months to March 31, 1936, 95.16.

The report also indicates a- nmre favourable situation in connection with arrears of instalments of principal and interest. The corporation had 3,904 urban and suburban securities on its hands on March 31, 1936, all but 31 being occupied. The rental collected from August 1 to March 31, 1936, was 96.51 per cent, of the rental payable and 86.08 per cent, of the gross instalments of principal and interest payable. The report records with pleasure that the corporation has been able to show a return of approximately 2i per cent, to the Crown on the contingent liability account. The accounts disclose a gross revenue from all sources for the eight months of £1,165,261, from which must be deducted £673,383 in respect of interest on stock issued to the Minister of Finance and debentures issued to tho public. This makes a gross profit of £491,878. Management expenses and other charges, including additional provision for overdue interest, amount to £149,992, leaving a net profit of £341,996. It is pointed out that the capital outstanding on mortgage accounts is £37,185,034. The average loan on residential securities is £564 and on rural securities £1,150. Government and local bod5 r securities stand at £3,014,391, representing principally the investments of the reserve fund. All these securities are quite satisfactory. The report states that the cash position is also satisfactory, but With the demand which now exists for now loans further capital may be required within tho next few months.

An addendum to the report dealing with the business of the board up to June 30 of this year states that the total applications up to that date from the inception of the activities numbered 5,559 for a sum totalling £8,146.945. Of this amount nearly £6,000,000 was for farm applications. The total number of loans authorised was 2,893 for a sum amounting to £3,917,355.

low: — No. Amount, Erection of dwellings 353 £238,585 Refinancing, etc. ... 662 520,630 Total farm author!sations 824 1,876,065 Grand totals 1,859 £2,635,280