Finance For Houses

Press, Volume XCIII, Issue 27872, 21 January 1956, Page 8

Finance For Houses

It would be a pity if the Joan market for purchasing homes became thoroughly upset as a result of the State Advances Corporation’s decision to restrict loans for purchasing existing homes. In the words of the Minister of Housing (Mr Sullivan), the new policy of the State Advances Corporation is to “ concentrate on new homes and ‘‘curtail loans for the purchase of “old ones”. The general manager of the Auckland Savings Bank (Mr F. E. Sutherland) suggests that this policy is being adopted, without the reservations the State Advances Corporation holds, by “ several ”

of Auckland’s “ largest lending “ institutions ”, which are not dealing with “any more applications for “ finance for homes. All give “ priority for the building of new “ homes ”. Such a policy has several weaknesses, a major one being, of course, that it would tend to relieve cne form of construction from effects of the “ credit squeeze With the pool of labour and materials restricted, financial relief to one section could be given only at the expense of other forms of construction, thus intensifying an unbalance that the present Government has tried to redress. A second important reason is implied by the State Advances Corporation itself, which says that it will preserve some flexibility in its policy and provide for “ special circumstances ”, which include providing for “ rapidly “ expanding families urgently needling accommodation ”. It is common for older persons with large homes to want to quit them as the family leaves and take smaller homes which can be easily managed. This practice is socially desirable; and if it became more general it would ease the housing situation by relating existing accommodation to needs. The practice can only continue if lending money is available for existing homes. The State Advances Corporation is careful to recognise this in theory, though it remains to be seen to what extent it will recognise it in practice. With finance limited, lending institutions may feel that they have difficult decisions to make in deciding where their capital can be employed best. But to depart from established practices for untried ones has dangers that should be considered carefully beforehand. The State Advances Corporation senses the dangers and acknowledges them by hedging its proposals with contingencies that, if applied, will make for flexibility of policy. If other lending institutions think it proper to adopt the general principle laid down by the State Advances Corporation they should, properly, adopt the whole policy. Though why lending institutions such as savings banks and insurance companies should take it upon themselves to close one channel of lending and open another wider is difficult to see. They, at least, have not the political impetus that can drive a government institution.