Sir Robert again gives interest-rate warning

Press, 24 April 1984, Page 23

Sir Robert again gives interest-rate warning

PA Auckland A property developer’s magazine is the latest vehicle for the Prime Minister, Sir Robert Muldoon, to fire a salvo at the leading developer and political aspirant, Mr Bob Jones. Sir Robert also used the quarterly magazine of an Auckland company, Baker Developments, Ltd, to attack critics of heavy overseas borrowing to finance big energy projects. He turned the article on interest rates into a fresh warning to finance houses to cut rates other than those on mortgages. Sir Robert said that part of the logic in buying a house was that, “even with a massive mortgage loan on it, you are stabilising your housing costs at today’s value and paying off your mortgages with dollars of constantly diminishing value.”

The higher the inflation rate, the better the bargain, although the home-owner would clearly suffer in other respects, he said. “It is, however, one of the reasons for the emergence of the Jones party... as Mr Jones over the years has always boasted that he has used the escalating property values caused by high inflation to refinance and thus make his fortune,” said Sir Robert. Low inflation rates caused by the freeze and the elimination of tax-avoidance schemes “represented a blow to Mr Jones, which caused the foundation of the Jones Party,” Sir Robert said. He predicted an inflation rate of 5 per cent for this year and said that as borrowing rates fell “so other lending rates besides property mortgages should come down, and that is going to be a major exercise this year.”