Interest rates lid blows

Press, Volume CXIV, Issue 33675, 26 October 1974, Page 13

Interest rates lid blows

(New Zealand Press Association) WELLINGTON, October 24. The ill-fitting lid on finance company interest rates finc.!’.y blew today when two big companL-; lifted interest rates to 12 per cent for a iive-year term.

General Finance, Ltd, today advertised a 12 per cent rate for flve-years-and-over debentures, compared with its previous top rate of 10 per cent. Australian Guarantee Corporation (N.Z.) Ltd, also announced it was amending its prospectus to offer 12 per cent on five-year and sixyear debentures. These are the highest interest rates offered by any member of the Finance Houses’ Association, which covers most of the bigger finance companies. Other association members are likely to raise their COMPETITION Since finance company borrowings for terms of five years and more were freed in May from the Interest on Deposit Regulations, the bigger finance companies have had a tentative agreement not to advertise at above 10 per cent. Many companies have privately been offering more than this, particularly in the last two or three months when some public companies have been offering very competitive rates.

On a five-year term Fletcher is paying 9| per cent, U.E.B. 10 per cent, and Motor Specialities 10.5 per cent for both four and five years. The managing director of General Finance (Mr G. V. Noble Beasley) said tonight that finance companies were grossly restricted in the short-term and medium-term market by the interest regulations. The only place they were now competitive was in five years-and-over money. The assistant general manager of U.D.C. Group Holdings, Ltd (Mr P. N. Lawrey) said that the rate increases today only followed the rise

to 12 per cent for unsecured notes by the General Motors Acceptance Corporation (N.Z.) Ltd, more than a fortnight ago. If the Government allowed finance companies to be more competitive for shorter terms, there would not be such high five-year rates, he said.