INTEREST RATES RAISED

Press, Volume XCIII, Issue 27859, 6 January 1956, Page 8

INTEREST RATES RAISED

! Per Cent. Increase In Overdrafts

STOCK, MEAT, AND WOOL FIRMS

(New Zealand Press Association) WELLINGTON, January 5.

New Zealand trading banks have increased the interest on overdrafts tq. stock and station agents, meat exporters, and woolbuyers. Banks may not vary the interest rate on overdrafts of . clients in these classes below 4 per cent, and above 5 per cent. In most cases they have now been increased from 4 per cent, to 4£ per cent.

This is the first time for some years at least, that interest rates charged to a section of borrowers have been raised by the trading banks apparently acting in concert. Hitherto adjustments have been made between each bank and each client.

An indication of the reason for th? banks’ action is given in trading bank statistics published by the Reserve Bank. The companies which are to be charged more for their borrowings are in classes which have been borrowing much more than usual. Increased overdrafts are inconsistent with the Reserve Bank’s policy of credit restriction.

Advances to stock and station agents were £5,851,000 in September, compared with £3.691.000 in September. 1954, to freezing works, meat companies. etc., £6,114,000, compared with £885,000. and to woolbuyers £2 646 000 compared with £990,000.

These three categories accounted for an increase of about £9,000,000 in advances, and the net increase in advances to all types of borrowers was only £9,227,000. Agents declined to comment when asked today to outline the likely effect of the increase. The Dominion secretary of Federated Farmers (Mr A. P. O’Shea) said that in the long, run it would probably be the farmer who wou’d have to find the money to meet the extra interest bill.

“5* per cent. Now Almost Universal’

“Tire meat exporters and the stock and station agents have always been .quoted the lowest possible rate of interest, as they support the country’s primary industry.” an Auckland bank manager said today, according to a Press Association message from Auckland.

Interest rates for overdraft on other accounts varied, but the maximum of 5 per cent, set by the Government, was now almost universal, he said. As most interest rates had gone up lately, the trading banks felt it was impossible to continue the 4 per cent. rste for meat exporters and stock and station agents, he added.

Meat export prices would not be affected by the increase, which would be passed on to thg farmers, an Auckland meat exporter said today.