Private sector warned to cut lending rates

Press, 5 August 1983, Page 1

Private sector warned to cut lending rates

Wellington “ Interest rate regulations could be applied to new, lower rates and extended to loans from solicitors and nominee companies, the Prime Minister, Mr Muldoon, warned yesterday.

Mr Muldoon told the Wellington Chamber of Commerce he expected private sector lending rates to be aligned with the new public sector rates now agreed and announced. “When I speak of private sector rates, I include those which in the past have not been controlled, such as

rates on loans from solicitors, nominee companies, and contributory mortgages.” Present regulations for interest rates were “something of a dead letter, because they apply to the old structure.

“I hope that I do not have to either apply them at new

lower rates, even less to extend them to other aspects of interest rates and other areas of the financial sector.

“Whether that has to he done will depend on those who are the decisionmakers in the financial sector,” Mr Muldoon said.

He was so far reasonably happy with the initial response to his calls for lower interest rates.

However, on past occasions the intransigence of one or two operators had resulted in unwelcome restrictions being applied to all in the same group of institutions.

“At the moment this is very much in the hands of the various associations to persuade their members to move in concert.” Mr Muldoon said that some of the things he had been doing recently in the field of economic policy had been unorthodox. “The reason is that these are abnormal times.

“I think all but the most sceptical are now beginning to believe that unorthodoxy runs a poor second to common sense in my textbook of economic management.” The large fiscal deficit was one aspect of policy that was increasing the debt burden both internally and externally, he said.

Some of the cost of today’s standard of living was being shifted on to future generations.

“On the other side of the ledger, however, the huge capital investments we are making in the energy-based programme, horticulture, forestry, tourist hotels, and amenities, even subsidised fishing boats, and the oil search, are a payment which will secure the standard of living of generations of New Zealanders in the future,” Mr Muldoon said.

“Surely common sense says that is a fair bargain.” Post Office interest rate

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