Tax cuts of little help to housing

Press, 26 February 1983, Page 20

Tax cuts of little help to housing

Savings have been boosted by the October tax cuts but the mortgage market is unlikely to profit from the windfall. Deposits at the trading banks have improved substantially. A recent Wellington report had it that they had “money running out of their ears.’’ The district manager of the Bank of New Zealand in Christchurch, Mr W. Lancaster. said this week that liquidity was much easier, but that the bank was still lending very limited amounts on housing. The Goverment. to control inflation, had restricted the rate of credit growth to 1 per cent a month and had mopped up the extra funds by increasing the reserveasset ratios to 26 per cent. When money was very tight, the amount the banks

were required to invest in Government stocks and other securities was struck at only 10 per cent, he said. The loans manager of the Australia and New Zealand Savings Bank in Christchurch. Mr W. D. B. Johnson, said the credit squeeze would remain “by design." The bank’s improved liquidity would not affect the mortgage market immediately, but it was unlikely that the supply of funds would become tighter. Instead. it would continue much as it had been last year, he said. The ANZ was still meeting reasonable requests, particularly from those with established savings records, but it was certainly not “throwing money around.”’ The Canterbury Savings Bank, because it tends to attract the smaller depositor.-

has benefited less from the new tax structure than other lenders. The cuts favoured higher income earners. However, the deputy general manager. Mr R. Bray, said that there had been “a modest increase in the level of deposits” for February. It has not as yet produced a greater volume of mortgage lending because the bank’s policy was to have an even cash flow throughout the year, he said. The CSB was still investing S4M a month in home loans but would review the figure at the end of the month and might raise it a little. The regional manager of the Countrywide Building Society, Mr Robin Adair, said that its deposit growth rate had remained steady and that it was still lending SI.6M a week on mortgages nationally.