8.—13.

15. The Arrears Position. —A consideration of the position of the annual increase in the arrears of interest and principal payable in respect of instalments that have become due in that time, is possible from the undermentioned table. The figures include any arrears from local-body debenture investments under Part 111 of the Local Bodies' Loans Act, 1926. The figures are taken in quarterly intervals and show T the yearly movements for the years 1932-35 inclusive :—

It should be pointed out that since 1932 a postponement of principal (where made) has not been included in the arrears position unless the postponement arises after due date— 4.e., through a Court order. Furthermore, arrears have been cleared in the Department's books in some cases by way of capitalization since the Finance Act, 1932, was passed. The capitalization would not be agreed to unless it appeared, on the information available, that there was a security to represent the total debt. The peak year of arrears so far as this Office is concerned was in 1931-32. The following financial year disclosed a substantial decline, and the downward trend was further confirmed in the year ended 31st March, 1934. For the year ended 31st March, 1935, the position has shown a decided improvement, and in it lies the encouragement for the future. 16. A further analysis of the arrears figures for the past three years has been made, excluding from the totals the arrears in the Local Authorities Branch. The amounts have been brought down to average monthly totals. The position shown is as follows : — 1932-33. 1933-34. 1934-35. Settlers .. ..23,040 17,462 2,978 Rural advances .. 8,076 5,075 -236 Workers .. .. 16,727 19,534 15,100 The Settlers Branch includes residential and farming securities; the Rural Advances Branch, as the name implies, only rural lands. It would seem that there is some evidence of a time-lag in the recovery of the position of the mortgagors in the Workers Branch. It should not, however, be overlooked that the margins of lending in the above three branches were unequal. In the Settlers Branch the statutory limit of any advance was 75 per cent, of the capital value, in the Eural Advances 66| per cent, of the capital value, and in the Workers 95 per cent, of the cost. Prior to the amending statute of 1923, the limit in the Workers Branch was 75 per cent, of the capital value. 17. Graphs (Form No. 1). —The movement of the arrears is illustrated in the graphs on Form 1 of the Schedule. Graph A shows the volume of the lending and the decline in the amount of principal outstanding due to repayments exceeding the new loans. The period covered is March, 1929, to March, 1935. Graph B shows the growth of arrears over the same period. Graph C shows the same information, but the plottings have been made on the percentage of arrears to principal outstanding at intervals over the same period.

7

Quarterly periods. Quarters ending. Year ending Year ending Year ending Year ending 31st March, 1932. 31st March, 1933. 31st March, 1934. 31st March, 1935. £ £ £ £ 30th June .. .. 163,023 163,123 158,773 58,118 30th September .. .. 185,689 165,169 179,288 56,832 31st December .. .. 136,411 119,295 125,709 73,997 31st March .. .. 157,061 111,623 44,362 18,724 Yearly totals .. 642,184 j 559,210 508,132 207,671