State Advances Policy On Loans Explained

Press, Volume CIX, Issue 32313, 3 June 1970, Page 30

State Advances Policy On Loans Explained

(New Zealand Press Association)

WELLINGTON, June 2.

Some criticism of the State Advances Corporation for being interested only in houses of dull, unimaginative design was justified, the Commission of Inquiry into housing was told today by the corporation’s deputy general manager, Mr E. J. Babe.

The corporation’s urban loan policy was directed towards assisting those on low and moderate incomes, and for this reason the houses built were of relatively low to moderate cost and of average design standards, Mr Babe said.

Design features were generally susceptible to public change over the years, and the corporation’s attitude moved with them. “It must be remembered that the corporation has to see that it gets good realis-

able security for the money it is advancing,” he said.

While consideration had to be given to the resale value of a proposition, in many cases the corporation’s resistance to making a loan on a dwelling of advanced style stemmed from a wish to protect an inexperienced client from being “swept away through monetary enthusiasm” for such a dwelling when it did not offer good security for the client’s money.

If the corporation got a good margin of security it would be more ready to accept an unusual design of limited market appeal, but if the loan required left only a small margin, a more conservative security more readily available would be preferred. In its loans, the corporation did not look to the Government for any guarantee against losses. It relied on its reserves, except in connection with industrial loans, he said. Since 1964 the interest rate of all 3 per cent rebated cor poration loans had been reviewable after five years and since 1968 all new loans bad been subject to review every five years. From August, 1935, until March 31 this year, the corporation had granted 174,485 residential loans for the erection of houses for a total of $826,193,986. Of these loans, 152,155 had been granted in the last 20 years. During the same period, $13,797 in loans had been granted to local authorities for the erection of about 6000 pensioner housing units. Since 1899 the State

Advances office and the corporation had put more than sl2s()m into the housing field in New Zealand. It was estimated that about 300,000 dwellings had been the security for a State Advances loan at some time during the last 70 years. He considered that loans to the average person wishing to acquire a home were adequate. In reply to a question from the commission’s chairman, Mr R. B. Cooke, of Wellington, on whether be considered the kind of housing spread taking place in Auckland

should be allowed to continue, Mr Babe said he did not think there had been any great loss of efficiency in Auckland. The commission’s next public sitting has been fixed for July 14 in Wellington. Besides the chairman, the commission consists of Mr H. J. Barrett, Mr A. M. Linton, Mr 1. B. Reynolds, Mr J. D. Walker, and Mr P. M. Mac Shane.

Lake Inquiry.—The Commission of Inquiry into the Lake Manapouri issue will sit in Wellington this morning