MORTGAGE FINANCE

Hawke's Bay Herald-Tribune, Volume 81, Issue 5, 29 September 1937, Page 3

MORTGAGE FINANCE

Our Owo Correspondent.)

State Advances Loans Exceed £5,000,000 HOLDING INTEREST RATES

(From

WELLINGTON, Laet Night. Dealing with the Government's mortgage adjustment legislation, Mr Nash said that one of the major problems with which New Zealand was .faced as a result of the depression was an equitable adjustment of the rights oi mortgagees and mortgagors. Much of the legislation • that was passed in this conneetion had. the effect of postponing adjustment rather than of faeilitating it, and the feelings of uncertainty which prevailcd undoubtedly had an adverse effect on mortgage finance operations generally. With a view to finalising and clarify* ing the whole position, legislation (th« Mortgagors and Lessees Behabilitation Act) was passed iast sossion, and Adjustment Commissions set up through out the Dominion to deal with applications^ and to make adjustments oi the liabilities of mortgagors and lessees in accordance with the method laid down by tho Act. The Act also provided for the constitution of a Court of Eeview to consider appeals against decisions of the Adjustment Commissions. A total of approximately 34,000 applications for adjustment have been filed affecting mortgages aggregating many millions of pounds. Adjustments Effected td Date. Thirty-three Adjustment Commissions have been set up to exercise jurisdictiou throughout the various districts. Tha commissions have been funetioning for several months past, and steady progress is being made. Up to the end of August, 1937, some 6000 applications have been disposed oi* either-by way of voluntary adjustments, withdrawals, oi hearing before commissions. Of approximately 4300 orders made by the commissions, some 1900 ' had at tho above date been actually sealed, involving the writing-off of a total amount of approximately £446,000, this amount representing.- mortgage mon'eys in excess of the values of the. secnrities as ascertained by the commissions in accordance with the Act. Somo 1652 mortgages the terms of ' which had expired have been extended. An amount of approximately £147,000 arrears of interest on mortgages had been remit ted. As regards leases, a sum of £14,000-odd arrears of Tent has been remitted, and in many cases the rate of rent payable has been reduced. Uneconomic Areas. The Government have not overlookerh the problems of men who are endeavouring to farm uneconomic . areas under land for settlement leases and other titles associated with the Crown, and are considering methods of dealing with the matter. New Loan Moneys. Apart from stabilising the position in 60 far as existing mortgages are con-. ccrned, the Government havo provided adequate finance on reasonable .terms for new borrowers. State Advances Corporation, t In this conneetion it is appropriate that I should refer to the operations of the State Advances Corporation as a major factor in the provision' of adequate mortgage finance on reasonable terms and based on the "table" principle. The extent to which the facilities of the Corporation have been availed of is shown by the loans authorised from April 1, 1936, to July 31 last. " *

Total autliorisations 5,169 5,437,019 The process of transferring to the Corporation the whole of the discharged soldier settlement mortgages, totalling £11,525,000, is now complete, and Corporation stock amounting to £8,760,000, bearing interest at 3| per cent. pei annum, has been issued to the Crowu in settlement, the balance of £2,765,000 constituting a contingent liability of the Corporation. The Corporation has now on its books mortgages . .totalling over £51,000,000. ..Lending-rates. The Government policy is to provide imp'le funds for sound securities at low I interest rates, which is the most impor- | tant factor both in lightening the buri den of fixed charges and in encouraging I the development of trade and industry. The lending rate of tho tState Advances Corporation has been held at 4J per cent., and the rate for local authoritTes' loans &t 3£ per cent. Local Authorities. During the past year some local authorities have experienced diffiCult.y in raising loans at 3i per cent., and the Government have been urged to allow a higher rate. Low interest rates, however, have proved an important element in promoting prosperixy and it is au integral part of the economic policy of most countries to maintain rates at a low level. In New Zealand it is the Government's policy to maintain interest rates at the lowest possible level. Accordingly the Government cannot agree .to increase the borrowing rate for local authorities, and in order to support the existing rate it is intended to increase the amount which the tftate Advances Corporation has available for investing in .the securities of local authorities.

Number Amount Urban — " £ Erection of dwellings 1,411 1,012,820 Refinancing .. .. .. 1,735 995,609 Other purposes .... 548 370,470 3,694 2,378,899 Rural — . ,r^r i Refinancing.. .. .. 1,188 2,607,690 Other purposes . . . . 287 450,430 1,475 3,058,120