Nat. Bank lowers rates

Press, 12 June 1986, Page 3

Nat. Bank lowers rates

ByS

SIMON LOUISSON

in Wellington The National Bank intensified the battle to win over mortgage holders with the announcement yesterday that it has bettered the cuts in mortgage interest rates made earlier this week by ANZ and the Countrywide Building Society. National’s home mortgage lending rates have been cut 1.25 per cent to 17.75 per cent while farm mortgages have also been lowered from 20 per cent to 18.75 per cent. The bank’s chief executive, Mr Jim Macaulay, also announced the bank’s intention to allocate more funds to mortgage lending and increase the maximum amount that can be borrowed to $75,000. Lending will be up to 75 per cent of valuation. Like ANZ, National will aggressively seek new

customers with the offer of mortgages at 18.75 per cent for new customers. The way will be further opened for borrowers with high mortgage rates to refinance their loans at the more attractive rates. Earlier this week ANZ offered a new deal for customers, offering up to $75,000 at 19 per cent. It also cut its mortgage rates for existing customers to 18 per cent to match the cut by the Bank of New Zealand which had dropped its rate to 18.5 per cent two weeks earlier. On Tuesday, Countrywide announced it had cut rates on first mortgages up to $30,000 2.5 per cent to 20.5 per cent. Second mortgage rates were cut 3 per cent to 21 per cent. The Minister of Housing, Mr Goff, predicted there would be a stampede of mortgage

holders over the next few weeks to get the best deal from finance institutions. Mr Goff greeted the National Bank’s announcement enthusiastically, saying that it clearly demonstrated how the cut-throat competition prompted by deregulation of the finance industry would benefit homeowners and buyers. “Building societies and trustee banks cannot continue to keep interest rates several points above the banks,” he said. A spokesman for ANZ said that the bank had had a “phenomenal” response to its Monday announcement. He said that one Wellington branch manager had had nine firm appointments before the end of Monday afternoon from people wishing to refinance their loans. National has also cut its

base lending rate to 17.5 per cent, the second fall in two months. The new rate will apply from Monday. Visa customers will benefit as well from a drop in their interest rates from 27 to 24 per cent from July 1. The largest mortgage lender in Canterbury, Trusteebank Canterbury, said it is reviewing lending rates and expects to make an announcement in the next few days. Trusteebank’s rate for new and existing mortgages was dropped 1 per cent to 20.5 per cent last month. The deputy general manager, Mr Richard Bray, said that drops in mortgage lending rates must first be preceeded by falls in deposit rates. Term deposits with the Trusteebank have fallen from 20 per cent a month ago to between 16 and 17

per cent. He also suggested that the trading banks might be subsidising mortgage lending. "It would be difficult to lend at 17.75 per cent and maintain a margin, but that situation won’t necessarily last,” he said. Allied Mortgage Guarantee Company, Ltd, said it would reduce its lending rates 1 per cent on all new mortgage advances, reports PA. After allowing for the guarantee fee, this brings the company’s debt servicing rates down to 18.5 per cent for first mortgages and 19.5 per cent for second mortgages. A.M.G. reduced its lending rates 2 per cent in May and the latest adjustment was described by the company’s general manager, Mr Graeme Mclntosh, as “fine tuning.”