Building Finance Plan

Press, Volume CIX, Issue 32118, 14 October 1969, Page 36

Building Finance Plan

(From Our Own Reporter) ROTORUA, Oct. 13. The setting-up of an effective mortgage insurance scheme for home-building, to be sponsored by the Government and supported by new avenues of finance, was recommended to the Timber Merchants’ Federation by the federation’s marketing committee.

The proposal was accepted unanimously at the federation’s conference, after some discussion, and the federation will now put its plans before the Government. "The building industry needs to attract more finance from the private sector, in addition to what is already available from existing sources,” said the convener of the committee (Mr R. H. C. Walshe), who is managing director of Fletcher Merchants.

“If the Government will guarantee to-provide a minimum percentage of house finance (this to be based on a level of finance allocated by it to mortgage funds, over the last year) then a mortgage insurance scheme can be established.” ' 6 Mr Walshe said he believed that the scheme, if guaranteed by the Government, would attract finance from al! sectors of the economy by offering guaranteed security

for second mortgage loans over periods of 20 years or longer. The loans could cover up to 90 per cent of the value of the house and section. An extensive report presented to the meeting by the committee presented figures supporting its claiitl that effective demand for houses is being seriously weakened by inadequate finance. The committee found that salary and wage rises had not kept pace with building increases, and that marriages were increasing, both in number and in percentages relating to the population. Figures produced by the committee showed that 51.5 per cent of the population married by the age of 24, and the average age of marriage was 24 for men and 21 for women. Independent assessments

had shown the need for housebuilding to rise yearly, the figure for 1969 being 28,400. Actually, in the year ended March 31, there were only 21,800 completions. The committee reached the conclusion that increases in State Advances Corporation lending limits had not kept pace with housing costs, and that there was a large gap between the maximum mortgage obtainable at first mortgage rates and the cost of the house. Young couples interested in a house were being discouraged by this, and by the high rates of interest required for a second and sometimes a third mortgage. The committee therefore recommended that the federation ask the Government to sponsor the scheme in the national interest.