Warnings on interest rates being defied —Mr Lange

Press, 23 September 1983, Page 1

Warnings on interest rates being defied —Mr Lange

PA Wellington New first mortgage rates for homes of 20 and 17 per cent were cited by the Leader of the Opposition, Mr Lange, yesterday as the Government again warned it was prepared to force interest charges down.

Mr Lange asked at a press conference if the Prime Minister, Mr Muldoon, was in fact capable of regulating the economy or “is it all bluff and bluster?”

He produced documentation to show that a first home mortgage of $32,000 had been offered by a Papatoetoe company, Landbase Securities, Ltd, at 20 per cent interest. The borrower also had to pay a procuration fee of $2BOO to the company, and a further $358 in costs were payable. Mr Lange claimed that the offer was made three weeks after Mr Muldoon had warned that he would retrospectively tax some lenders who did not lower interest rates.

Mr Lange also produced a letter which he said was from a solicitor. The letter said a client’s mortgage from a building society had increased from 12 per cent to 17 per cent on renewal recently. The letter was dated August 16, but did not say when the rate had been increased. Mr Lange claimed that the transactions were in defiance of Mr Muldoon, coming after he had tried to push interest rates down to about 8 per cent. “I am sick to death of the Prime Minister’s promising deliverance, and totally fail-

ing to execute on it,” he said. The building society’s interest rise, said Mr Lange, was a “modest near 50 per cent increase — at two

times what the Prime Minister thought was appropriate.” Earlier yesterday, the Acting Minister of Finance, Mr Falloon, said that the Government was prepared to move selectively to bring down interest rates. Some groups were “not playing the game,” he said. He mentioned building societies, motor-vehicle dealers, and mortgage lenders in a speech which urged groups to bring pressure on members not com-

plying with a reduction in rates. Mr Lange showed journalists a General Finance offer of 14 per cent investment rates to existing investors, closing on September 30. Mr Falloon had said that finance houses and others were offering special deals to existing investors. Mr Lange said one prospectus he had seen offered between 1 and 2.5 per cent above the public rate, depending on the term. “While this is not a new practice it is not appropriate in the present situation, and gives the lie to protes-

tations of willingness to reduce rates,” he said. Mr Muldoon also warned yesterday that the Government had regulations to restrict lawyers’ interest rates drafted and “ready to go.” However, he said from Port of Spain in Trinidad that he would not act on the regulations until he returned from overseas next month. “Is he actually going to move, from the Caribbean, to do so, or are these people going to end up paying that?” Mr Lange said.

Referring to Mr Falloon’s speech, Mr Lange said, “How long have they been promising that?” The vice-president of the Law Society, Mr Richard Collins, said that the society had had various inquiries about Mr Muldoon’s statement.

Mr Collins said,- however, that the rate at which money was borrowed and lent was basically arrived at by the law of supply and demand.

“Of course lawyers wish to see inflation come down and lending rates at reasonable levels, and they have an important role in counselling clients accordingly, but they cannot fix the rates ‘themselves any more than King Canute could regulate the tides,” he said.