BUILDING TRADE WILL BE LOADED

Sun (Auckland), Volume 1, Issue 49, 20 May 1927, Page 11

BUILDING TRADE WILL BE LOADED

INCREASED BANK RATE EFFECT OF DEAR CREDIT The effect of the increase of one half per cent, in the overdraft rate which was recently made by the banks has barely had time to effect the building trade in Auckland. But inquiries among builders and the building investment companies show that it will eventually react against the building trade, which is already suffering from a depression All firms working on an overdraft will be hampered through the bankers' attitude. Said a prominent builder: “I can’t see what we can do, but we will have to restrict credit to our customers who are building homes for themselves. “The house shortage has been overtaken and it is regrettable that the banks should have taken action at the particular moment when we have to make ‘every post a winning post’ to keep our staffs employed. It will certainly restrict building. Many of the smaller builders are kept going at present only through Government loans and the money lent is only coming through slowly.” Building Schemes Hit Builders’ suppliers also anticipate feeling the effect through the cessation of building. The trade will also be affected by the contraction of advances to building schemes which are looking to the bank for accommodation. The suggestion was made that the building loan companies should have been granted some immunity by the banks from the increased overdraft rate on the grounds that they assist the State Advances Department considerably, saving a drain on the Government’s funds. The Building Societies Among the building societies it is considered that any effect of the increased overdraft will not be felt yet. It does not affect the terminating societies, for these do not work on an overdraft as the permanent building societies do, but invest their own money in home building. “In the long run,” said a man prominently associated with a terminating society, “it will send them more customers for loans. The increased competition will then raise the tender prices for loan money and make the repayments to the householder a little dearer.” According to other opinion the increase will mean that borrowers from building loan companies will have to pay, but the effect has not been felt yet.