Housing Loans

Press, Volume XCVIII, Issue 28888, 7 May 1959, Page 3

Housing Loans

Sir, —I was very interested in the figures given by Mr N. E. Kirk, M.P., of the amount advanced for housing at 3 per cent. I am even more interested as to where the money so advanced has been obtained by the Government —whether by way of Reserve Bank credit or the proceeds of loans raised by the Government on the open market. If from the Reserve Bank, 3 per cent, is too high an interest-rate; if from loan proceeds whiqh must have been raised at a higher rate than 3 per cent., perhaps the member for Lyttelton would advise as to who is finding the difference between the rate at which the money was raised and the 3 per cent, at which it has been advanced. Would it be the general taxpayer, many of whom are in greater financial difficulties than some who are receiving the loans at 3 per cent., and, in particular, the single person who has been so heavily slugged by Mr Kirk and his friends.—Yours, etc., LYTTELTON ELECTOR. April 23, 1959.

[The member of Parliament for Lyttelton (Mr N. E. Kirk) replies: “The introduction of the 3 per cent, loan three months after the Labour Government was elected brought about the first reduction in house mortgage rates since 1949. This has been achieved at no cost to the general taxpayer. I can tell ‘Lyttelton Elector’ that the provisional accounts of the corporation show that a gross profit of £1 0s 7d was earned on every £lOO of capital inves‘"d by it. Management expenses absorbed only 8s lid, leaving a net profit of Ils 8d on which taxation amounted to 8s 7d will be levied. After transferring Is 4d to reserves, the resulting profit of over £135,000, or Is 9d on every £lOO invested, will be paid into the Consolidated Fund.” Mr Kirk added that the State Advances Corporation was itself paying £75,000 in taxation this year despite 3 per cent, loans to home builders.]