LOWER INTEREST

Hokitika Guardian, 23 May 1932, Page 3

LOWER INTEREST

WORKING OF ADJUSTMENT ACT

SEVERAL POINTS CLEARED UP

Many mortgagors, and many mortgagees for that matter, are uncertain of . the : way in which they will he affected by the povisions of the National Expenditure Adjustment Act. The Act provides that no one need pay more than 80 per cent of the interest which he was paying on January 1, 1830 a condition being that the reduction is not to bring the interest rate below 5 per cent.

An instahW would be that if a man were paying interest on £IOOO at 6 per cent., that js £OO, he would be entitled to have the interest reduced to £SO, 80 per cent, of his original interest would amount to only £4B, hut the 5 per cent, provision makes £SO the minimum amount. The Act came into force on April 1 of this year, and is retrospective to that date. That means that a mortgagor is entitled to claim a refund of any payment of over 80 per cent of the rate that has been paid since April 1.

It has been, asked whether or not the mortgagee has a right to foreclose if he can find a better investment. T)io answer is no. If the reduced rate is paid regularly he has no more right to foreclose than before the reduction was brought info force. There is nothing in the Act to prevent the lending of money on mortgages at a higher rate than 5 percent. A solicitor stated ' this morning that there was money available at (i per cent., the rilling rate before the reduction and that people were willing to pay (> per cent, for money still. Further, lie stated that there were plenty of people willing to take 5 per cent for their money if the investment wi's sound from all as pets. The reduction is based solely on th<’ rate applying on Jsmuarv 1, 1980. fl' there have been reductions since then they do not enter into the calculations at all. Tim same reduction applies to rents and again the lias’s on which the reduction is I'nmidrd is the rent on January 1, 1930.