Refinance terms announced

Press, 4 August 1977, Page 18

Refinance terms announced

PA Wellington The Housing Corporation says that its extended move into refinancing mortgages will apply only where the initial loan was for at least two years.

Once refinancing is granted, it will be for an average term of 15 years, said the corporation’s residental lending officer (Mr N. J. Orange). Refinancing had been available from the corporation since 1974 in cases where an actual sale was pending because the mortgagor could not refinance, he said.

Under the extended scheme announced on Monday by the Prime Minister (Mr Muldoon) this would be relaxed. Refinancing would be available simply on the production of evidence that the mortgagor had sought finance elsewhere, and that the mortgagee was not prepared to renew the loan except at an interest rate the mortgagor could not afford to pay. Mr Orange said that refinancing would be to the normal corporation average loan level of about $14,000 or

$15,000, with a maximum of 90 per cent of the value of a property. “There are people who have obviously taken on a loan which is beyond their capacity to service, and in those cases we will simply have to decline to refinance,” he said. “We will also have to bear in mind the person’s record of paying interest on the initial loan.

“We will not lend to people who have proved that they are just not capable of home ownership.” He said that although the basic interest rate for refinance would be 10 per cent, this would be reduced if that was necessary to make the person no worse off than when he was paying the initial loan.

Mr Orange said that he did not think there would be any move to charge more than 10 per cent, even if private refinancing rates were higher than that.

“It is part of the corporation’s role to make refinance as reasonable as possible,” he said.