FIVE PER CENT.

Auckland Star, Volume LXII, Issue 166, 16 July 1931, Page 8

FIVE PER CENT.

INTEREST RATES.

REDUCTION ARRANGED.

MR. FORBES' ANNOUNCEMENT

HESUX.T OF NEGOTIATIONS

STATEMENT BY BANKS LATER.

(By Telegraph.—Special to " Star.")

WELLINGTON, this day,

• The Prime Minister and Minister of Finance, the Rt. Hon. G. W. Forbes, announced to-day that as the result of comprehensive negotiations a voluntary arrangement had been agreed upon by the various financial authorities in the Dominion which will have the effect of i:heapening the price of money.

The present rate of 51 per cent for over-the-counter sales of New Zealand Government inscribed stock or debentures will lie reduced to 5 per cent on August 1, 1931. In the meantime, the same maturity date will-be maintained, i.e., to September 1, 1937.

A ! readjustment in respect to Rural Advances bonds is under, consideration.

As has already- been, announced, the State' Advances' Board will, in so far as its present mortgagors are concerned, sympathetic consideration to any cases of genuine hardship that may he brought under its notice. Where circumstances warrant it, the board is also prepared to grant consideration, where possible, to extensions of the balance of the term of the loan, whereby the halfyearly payments due by its mortgagors will be made less burdensome.; , •

Tlic Public Trustee, in order.:to secure unanimity, will reduce by 5 per cent the rate to be paid for new deposits by way of investment agencies in the common fund for a fixed term of years, and, in addition, will pass on the benefit accruing from such new deposits to his clients. Local Body Securities. The current issues of local body securities in respect to unexhausted loan authorities will also be reduced by_ £ per cent. Section 28 of the Local Bodies Loans Act, 1926, which provides for a rate of interest on local bodies loans up to 5A per cent, will be amended to reduce the maximum rate to 5 per cent. Section 114 of the; same Act provides that the Minister of Finance -may consent to an increase of this rate,, and such increase can be authorised by Order-in-Council. in progress in respect to local body loans will; of course, be safeguarded.

Trading Banks' Attitude. An announcement will be made b/ the Associated Banks in New Zealand regarding deposit and overdraft rates. The banks have had the matter under consideration, and have indicated that, provided the ratesl;.paid by other institutions on satisfactorily reduced, the banks'' will reduce their rates on fixed deposits, and they will, also, make suitable adjustments in the rates on advances. - v '' Private Savings Banks. Similarly the trustee .saving banks at New Plymouth, Hokitika, Dunedin and Invercajrgill have agreed to a & per cent, reduction on their, present .deposit rates, and to pass on the benefit to borrowers. The Auckland.Savings Bank has agreed to reduce its deposit rates by £ per cent/ and its lending, rates by J per cent, the latter to apply, not only to future, but to current mortgages. It is proposed that these arrangements will operate on and after August 1, 1931, which will necessitate a slight amendment to section 23 of the Savings Banks Act, 1908, under,- which, in ordinary circumstances, three months' notice in the "Gazette" of an alteration in interest rates on deposits is required. . Building Societies. A decision that the rates of interest on all future deposits and on mortgages be reduced by A per cent has been reached by the majority of the building societies throughout New Zealand, and it is confidently hoped tha* the rest will also agree to fall into line. The investment, mortgage, trustee and deposit companies throughout the Dominion have also been approached, and generally have agreed upon a & per cent reduction for new deposits, and to give the benefit accruing therefrom to their clients. P.O. Savings Bank Rate, 3§ p.c. The Post Office Savings Bank rate of 4 per cent, which has not varied since 1920, will be reduced on August 1, 1931, to 3f per cent, the rate which operated in 1914, and a rearrangement in respect to Post Office investment certificates is under consideration.

"For obvious reasons," remarked the Prime Minister, "it has not been practicable to get in touch with all the various trading companies in the Dominion which take deposits, but generally it is concluded, from views expressed on the subject, that these companies will welcome the arrangement, both in their own and in the public interest, and will co-operate in the general reduction in the price of money." " Will Lessen Costs." The Prime Minister added that he was grateful to the financial authorities concerned for the amount of interest and co-operation which had been shown in the matter. It clearly illustrated that those authorities were anxious to bring ab<?ut a general reduction of internal costs, and so assist in the solution of the problem created by the general slump in prices for our products sold overseas. "Thus," he concluded, "the completion of an amicable arrangement amongst all concerned will, it is anticipated, lessen money costs for the future, and in many cases, where other commitments do not prevent it, borrowers will receive the benefit in respect to current mortgages." BANKS' STATEMENT LATER. (By Telegraph. — Parliamentary Reporter.) WELLINGTON, this day. It is authoritatively learned that the statement which the Prime Minister indicated would be made on behalf of the Associated Banks will be issued at a later date.