Loan help for poorer families

Press, 24 August 1977, Page 2

Loan help for poorer families

PA Wellington One-income families applying for a first mortgage tor a new house from tne Housing Corporation would be eligible for a minimum of $3OOO in supplementary loan assistance, said the corporation’s assistant directorgeneral (Mr J. D. Ward) yesterday. Commenting on the amended additional loans scheme announced by the Minister of Housing (Mr Holland), Mr Ward said the scheme was designed to help one-income families with at least one child who got little or no benefit under the present scheme. Mr Ward said the present scheme was introduced late last year to provide low-in-come earners with extra help when buying a house. However it applied only to people earning between $BO and $l3O a week gross, plus $5 a week for each > dependent child, he said. The supplements ranged from $lOOO to 36000.

The new scheme meant that any one-income family with one or more children which qualified for less than $3OOO under the present rules would now receive $3OOO.

“The income ‘tag’ applying to the present scale of supplements has been dropped in a move to assist a group disadvantaged by the present scheme,” Mr Ward said.

The criteria f or the new form of loan help were first homes only; new housing only; at least a one-child family; and the dependent spouse must not have worked for at least six months before the application, but income of up to $2O a week would be ignored.

Building industry sources are divided over whether the housing package will achieve its target of a minimum of 26,000 new homes completed in the year ending next March. I The president of the Mas-

ter Builders’ Federation (Mr F. Cree) said yesterday that there was every possibility of meeting the target, but that this was still only "cosmetics.” It did not solve the long-term problem of providing enough mortgage money at interest rates people could afford. Another industry source said the package had come too late in the year to achieve the target. “The money won’t come on to the market until Christmas, which is too late to get completions by March,” he said.

The research director of the Bankers’ Association (Mr W. A. Poole) said the S33M released for new housing loans would amount to about 2200 mortgages of $15,000 each. The office of the Minister of Housing (Mr Holland) confirmed that the sum did not depend on a high flow of savings because, if necessary, the savings banks affected would be able to sell their Government stocks to meet the new , lowered Government stock ratios. Both Mr Poole and the general manager of the Wellington Savings Bank (Mr J. W. Brown) said they were fairly confident that enough people would want loans for new houses to take up the whole S33M.

However, Mr Poole said there might be less demand in Auckland where permit figures were running at only half last year’s rate. This meant more of the money might have to be directed to other areas, he said. Mr Cree said the increase

from 1250 to 1500 in the number of State rental house for which contracts would be let would undoubtedly help. This was especially so if it was spread around the country in areas where builders had the least work.

He said he was pleased with moves to lengthen the repayment period of corporation loans on sections and of second mortgages from the Post Office Savings Bank. However, he believed that although SSM was allocated to the Post Office scheme last year, only about $600,000 has actually been taken up because people could not get the necessary first mortgages from other sources.

The Government could attract housing finance by public investment through the Housing Corporation, says the chairman of a home builders’ group in Auckland, Mr R. M. White.

It could easily borrow money at 12 per cent and lend it on 12 per cent.

Such an interest rate on a second mortgage would be more attractive than the 20 per cent offered by finance companies. “There is no need to set up any mortgage investment company on a national basis. We already have one in the Housing Corporation. It is very well equipped with valuation staff, technical staff, and collection facilities,” said Mr White.