HIGHER INTEREST RATE

Sun (Auckland), Volume III, Issue 730, 1 August 1929, Page 11

HIGHER INTEREST RATE

CHARGES ON STATE ADVANCES OLD LOANS UNALTERED (TUB SUN'S Parliamentary Reporter) PARLIAMENT BLDGS., Wed. In. all cases where an original StateAdvances mortgagor makes application for an additional loan, the rate of interest charged on the previous loan is not disturbed, and the borrower is charged the current rate of interest on the further advance only. This assurance was given by the Prime Minister in the House of Representatives today in reply to a question on the subject by Mr. W. Lee Martin (Raglan). Mr. Martin had asked (1) whether it had come under the notice of the Minister of Finance that when a State Advances Office mortgagor, who li/l an existing loan bearing interest at 4h per cent., applied for further advance, the State Advances superintendent, in some cases at least, cancelled the old rate of interest on the old loan and charged the present G per cent, rate on the amount of the old loan as well as on the amount of the new advance; (2) whether the Minister would give instructions that in such cases mortgagors were to have the benefit of the old rate on the existing amount of the old loan; (3) whether the Minister would make this rule apply to all future payments in respect of all applicants who had. had their rates raised?

The Prime Minister said that tvhej/o any applicant desired to increase the amount of a loan it would be necessary for that applicant to pay the ruling rate of interest on the increase. Mr. A. Harris (Waitemata): For the full amount?

The Prime Minister replied that the ruling rate would be charged on the amount of the increase. The rate of the old amount would be unchanged. Mr. Martin said that he was not objecting to the increase in the new amount, but to the increase on the old amount as well. The Prime Minister: If the old amount were expiring and the applicant put in an application for a similar amount, plus an increased amount, then in all probability he would be dealt with at the current rate of interest. Mr. Martin: That is not the position. I can give you information. Tho Prime Minister: I would be glad if you would. We don’t want any misunderstandings. The State Advances Department does not want to treat its clients otherwise than reasonably.