Mortgage credit suffers squeeze

Press, 4 March 1982, Page 1

Mortgage credit suffers squeeze

Mortgage money is hard to find because so many investors are putting their money into the Government’s inflation-proof bonds, spokesmen for some big lending institutions said yesterday. The bonds, which were introduced to reduce the overseas deficit, have absorbed $5OO million since late October, and the lending manager of the • Canterbury Savings Bank (Mr P. Reyland) said that investment was continuing at the rate of $3 million a day. The effect had been toreduce the amount of money available in the private sector — a big source of mortgage finance. The Otago Savings Bank had stopped lending and did not know when it would return to the market, said the Dunedin manager (Mr A. L. Fleury) yesterday. . The Canterbury Savings Bank was still lending to everybody meeting its

criteria — but the criteria had been made more stringent, said Mr Reyland. Whereas last year the bank lent to anybody able to meet the repayment schedule, loans were now available only to existing customers. “With $3 million a day going into the Government’s coffers, money is tight right round New Zealand,” he said. The managing director of the Canterbury Building Society, Mr C. Jenkins, said that the demand for mortgages certainly exceeded the supply. “We have had to tighten, our lending a little since Christmas as a result of the inflation bonds,” he said. The New Zealand Building Society said that continued competition from the bonds meant that the society was likely to have less to lend. Other finance houses and trading banks which were approached yesterday either

declined or were unavailable for comment. Mortgage money was available from the Government through the Housing Corporation. Solicitors in Dunedin had been referring applicants to the corporation because their trust funds were running low, the “Otago Daily Times” has reported. The president of the Canterbury Law Society (Mr P. G. Hill), said that he did not think there had been a run on solicitors’ trust funds in Canterbury. “No-one’s told me that they are embarrassed,” he said. However, demand was exceeding supply and this was due partly to the effects of the inflation bonds. “To some people, the bonds are more attractive than putting money out on first mortgages,” he said. A spokesman for the Christchurch Housing Corporation office said that there had been no sudden increase in loan applications.