BRIGHTER OUTLOOK.

Auckland Star, Volume LIX, Issue 289, 6 December 1928, Page 9

BRIGHTER OUTLOOK.

LOWER MORTGAGE RATES.

STIMULATION OF BUSINESS.

GOOD LEAD GIVEN.

[ The trustees of the Auckland Savings Bank carried a resolution at a meeting yesterday to the effect that the rate of interest on all mortgages in future would be at the rate of b" per cent, and that 6 per cent would be chargeable on all current and overdue mortgages as from January 1 next. This decision is welcomed in all business and financial circles. "The Auckland Savings Bank deserves congratulations," said a retired business man this morning. "The reduction in the rate of interest on mortgages, although small, is a step in the right direction, and will help to restore confidence. It must have a stimulating effect on building, and I expect to see great activity in this direction in the New Year. I am referring more especially to workers' homes. There have not been nearly enough houses built in recent times and I am one of those who believe that the more homes the workers build the more contentment there will be throughout the country. When a man owns his own place he is more contented and happier in every way. The renting or leasing of houses means deterioration to the property as a rule, because there is not the incentive to make improvements. I must say that the Auckland Savings Bank has always been one of the most progressive institutions in Auckland and the trustees have helped largely to make Auckland forge ahead." Loosening Purse Strings. Mr. Richard Arthur said, provided the margin of security was not too large, the reduction in the rate made by the Savings Bank was a good thing, and would help to loosen the purse strings of the moneyed community. "As prices are to-day," he continued, "the twothirds margin usually adopted by lending institutions is reasonable, but not on the value of three years ago. The action of the bank will certainly tend to create confidence. The property and building market and trade generally have been dead in recent times, but there are signs at present of improvement. Workers' homes should go up in greater numbers now. One large public institution has been lending recently at 6 per cent on long reducible mortgages and no doubt all lending institutions will reduce their rates in conformity with the bank's decision. Good Transport Needed. "I cannot help thinking," said Mr. Arthur, "that outer suburban transport has had a good deal to do with the slump in house properties and with the election of the new Transport Board there should be more confidence and a desire to build, provided always that the board acts in the interests of the suburbs and gives good services at reasonable fares. Some of the decisions of the licensing authority have been responsible for the drift of population citywards and this will be checked with a board with a broad outlook studying the outlying districts and their future." "At the present moment the property market is showing a renewed interest," stated the principal of a large- financial institution. "I cannot say that the number of sales have been great, but when one hears many recent inquiries for property it can only be taken as a •rood sign. I am speaking in regard to city and suburban properties. The announcement by the Auckland Savings Bank of a reduction an the rate of mortgage interest is, in my opinion, the first definite step in an improving market. The change of government has certainly made a difference, and the prospect of large emus of money on easy terms through the Advances to Settlers and Workers Departments has no doubt stimulated the position. Lower interest naturally means easier conditions to purchasers and it only needs another few steps in advance on a par with that taken by the Auckland Savings Bank to stir the people into definite "action. It hae been a case of money lying idle in the past and people wandering about wondering what to invest in. The buoyancy so noticeable to-day must have its effect on Christinas trade in general, and after the holidays I expect to see a steady improvement all round in all business activities." Stimulating Effect. Mr. W. H. Alexander, lard and estate agent, expressed the opinion that the reduction in the rate of mortgage interest would have a very definite stimulating effect on investors and purchasers. "There will be an inclination to launch out," he said, "and provided nothing in the nature of a boom is permitted it may be concluded that prosperity will again overtake the city. There was, up to the time of the general election, a reluctance for people to invest in either city or suburban properties, but I have noticed practically from the day following the poll sigris of greater confidence in the future. If the policy enunciated by the coming Prime Minister of securing large sums of money for the building of homes is put into oj>eration the building trade will again be netive and the unemployment question definitely settled." Must Follow Suit. "The action of the Auckland Savings Bank will tend to lower the rate of interest all round," said the head of a large legal firm which handles on behalf of clients large sums of money for investment. "We will follow suit and reduce our mortgage rate to six per cent at once. There has been a tendency in recent times for investors to place their money in gilt-edged securities, but >.lie moment that there is increased activity in the property market we will have no difficulty in persuading many of our i clients to place t!ieir money in land and houses. The bank has certainly done a great service to the community Intaking such a commendable lead, and it means that everybody must follow suit."