P.O. mortgages difficult to match—C.S.B.

Press, 3 August 1983, Page 1

P.O. mortgages difficult to match —C.S.B.

Private lenders will find Post Office first-mortgage money at 10 per cent very difficult to match, according to the deputy manager of the Canterbury Savings Bank, Mr R. T. Bray. The move signalled a new level of competition between the Government and the private sector, he said. Although the 9 per cent interest rate charged by the Housing Corporation was lower, the effect was off set by the strict eligibility criteria the corporation imposed. Mr Bray said that from today the C.S.B. would offer lower interest rates on term-deposit accounts: 8 per cent for 30 days, 8.5 per cent for 60 days, 8.75 per cent for three months, 9 per cent for six months, 10 per cent for a year, and 9.5 per cent for two to three years. The new rates repre-

sented a reduction of ’ between 2 and 4 per cent and the bank would have to ensure that they were competitive before revising its lending rates.

“Unless we can attract sufficient deposits, we will not have money available to lend,” he said. However, he said that the C.S.B. hoped to announce reduced rates on new mortgages before the end of the month. He could give no indication of when existing mortgage rates would be lowered, except that it would be much later. “The interest-rate market is still settling down and I believe that it will be some time before it settles down to an acceptable level,” said Mr Bray. The Prime Minister, Mr Muldoon, announced at a post-Cabinet conference yesterday that the Post Office

would let first mortgages at 10 per cent.

He said that the Cabinet had decided to strike a rate rather lower than it would have used had the Government not been about to bring interest rates down.

The Government last week cut interest yields on its stock, and is surveying all its lending rates.

Mr Muldoon would not say what the rate initially intended for the Post Office first mortgages had been, only that it was “a good deal higher” than 10 per cent.

He also said he hoped to announce decisions “very shortly” on the survey of other Government rates. A Cabinet committee will look at them “within the next day or two.”

Housing Corp. terms changed, Page 2