Govt. Loans For Buying Existing Houses

Press, Volume CIII, Issue 30399, 25 March 1964, Page 9

Govt. Loans For Buying Existing Houses

(Neto Zealand Press Association) WELLINGTON, March 24. The Government was ready to proceed with the three main extensions of its election housing policy, the Minister of Housing (Mr Rae) announced today.

The State Advances Corporation was being instructed to accept applications for Loans up to 100 per cent of the cost of new houses with a limit of £2850 where the applicant owns a suitable unencumbered freehold section, he said.

qualified for the concession rate. The State Advances Corporation will transfer its mortgages to purchasers of approved existing houses who have families of one or more children, up to two-thirds of value and not exceeding the present lending limits of £2500 to £2650 according to the size of family. Interest will be at 3 per cent if qualified by income or at 5 per cent if not qualified for the concession rate. Mr Rae said loans on existing houses and transfers of State Advances mortgages had in general been discontinued since 1956. This was done to make the maximum amount available for building extra accommodation. Loans for new houses would continue as before but the new policy would provide finance for these who considered an existing house would suit them better and at the same time would make for greater utilisation of existing houses. Mr Rae said it had been decided that future 3 per cent loans would be subject to review at five-year intervals and that where the borrower

was no longer qualified for the rebated interest rate it would be adjusted to the corporation’s standard rate. “The present policy of basing the interest rate for the life of the loan on the applicant’s total income at the date of application has in practice shown anomalies and has not taken regard to subsequent improvement to pay the standard rate, which is still the lowest interest rate in the country,” Mr Rae said. The five-yearly review of future loans would be more equitable to all borrowers. Mr Rae said he hoped the greater availability of money for the purchase of existing houses would not result in increased prices being asked. The State Advances Corporation would be taking notice of this aspect and asked intending borrowers to note that the loans up to £2500 to £2650 according to size of family would be based on two-thirds of value and not necessarily two-thirds of the purchase price.

The present limit is £2700 and under this policy, which was implemented in 1961, more than 5000 applicants have been accommodated. The extension to £2850 will further encourage home builders to put their savings into the purchase of a section of their choice. The State Advances Corporation will lend to applicants with families of one or more children who wish to purchase approved existing houses up to two-thirds of the value within the present lending limits (£2500 to £2650 according to size of family). Interest will be at 3 per cent where qualified by income or at 5 per cent if not