Interest rate rise to continue — bank

Press, 22 June 1985, Page 8

Interest rate rise to continue — bank

Mortgage interest rates would probably not start to fall for 12 to 18 months, said the general manager of the Trusteebank Canterbury, Mr Frank Dickson. Interest rates were likely to continue to rise in the next six months, in spite of a 2 per cent drop in interest rates on the latest Government stock tender, he said last evening.

“The drop in the Government’s interest rates is an encouraging sign, but it will take more than that to convince the market of a move downwards,” said Mr Dickson.

“The most likely outcome of this drop is that rates will not go as high as. they might otherwise have done,” he said.

It would be wrong for people to assume that interest rates would come down as a result of the Government’s move. A number of lenders, including Trusteebank Canterbury, were lagging behind with their mortgage rates because of problems such as the need to give notice to mortgage holders. Some were up to six months behind. This lag had to be made up, said Mr Dickson. The Prime Minister, Mr Lange, and the Minister of Finance, Mr Douglas, said yesterday that the drop in interest rates in the latest Government stock tender reflected confidence in the Government’s resolve to deal with the country’s economic problems.

Mr Lange warned that dramatic overnight reductions in mortgage interest rates should not be expected. These would. come down gradually over the next year or so.

National’s spokesman on housing, Mr Roger McClay, said Mr Douglas should give a clear indication of when mortgage interest rates would fall and by how much.

“Young home owners are not interested in the politics of this matter, but rather in whether or not they can survive much longer and continue to pay the exorbitantly high interest rates created by the Labour Government,” he said.