Car and mortgage interest rates up

Press, 20 July 1984, Page 4

Car and mortgage interest rates up

PA Auckland Allied Finance, which also owns the car dealer, Auckland Motors, yesterday raised its interest rates from 17 to 24 per cent. Its manager, Mr Barry Graham, said he believed most other financiers had set similar rates. The executive director of the Motor-Vehicle Dealers’ Institute, Mr Colin Stone, said he had heard that one finance company had gone as high as 26 per cent, and another to 27 per cent. According to another Auckland dealer, rates appeared to be generally settling in the low 20s. “Previously it was very difficult to get anything on deposits,” said Mr Graham. “We were putting our dealerships on allocation. It was getting close to the stage where we would have had to say that we just could not supply finance. “The important thing is that we are going to be able to supply hire-purchase fiance, where before it

really was drying up,” he said.

Motor Trade Finances, jointly owned by the MotorVehicle Dealers’ Institute and the Motor Trade Association, yesterday raised its interest rates from 17 to 19.9 per cent. Big mortgage institutions, including the Auckland Savings Bank and the United Building Society, said they would delay increases until next week.

United’s managing director, Mr Colin Jenkins, said he believed the market would follow the lead set yesterday by Broadbank, which offered investors 13.25 per cent on three-year debentures, and said it would charge 17.5 to 18 per cent for personal loans. The Countrywide Building Society yesterday announced it was lifting interest rates on one-year term deposits to 12 per cent. It is also raising the rate on its “money works” accounts, which can be withdrawn at call and carry weekly prizes of up to

$lO,OOO, from 9 to 10 per cent.

The society’s chief executive, Mr Peter Martin, said that like other institutions Countrywide had adopted a policy of “wait and see” on lending rates. The president of the New Zealand Law Society, Mr Bruce Slane, said he expected interest rates on mortgages arranged through solicitors to rise in line with institutional rates. A solicitor with one of Auckland’s biggest mortgage practices said his firm would probably raise first mortgage rates to 14.7 per cent. A private mortgage broker, Mr Geoff Freebody, said he expected first mortgage rates to rise to about 15 per cent, with second mortgages between 17 and 22 per cent, depending on the security involved. “There is a very big pentup demand for mortgage finance, because the regulations have kept a lot of investors away from lending,” said Mr Freebody.