Banks lift base lending rates

Press, 14 January 1987, Page 1

Banks lift base lending rates

The ANZ Bank and the National Bank moved yesterday to lift their base lending rates 1 per cent, but Trust Bank Canterbury said it had not decided whether to follow. .’ ?..... Both the ANZ and the National Bank cited higher deposit costs as the reason for lifting their base rates to 19 per cent Earlier this month the Bank of New Zealand and Westpac Corporation also raised their base lending rates to 19 per cent. The deputy general

manager of Trust Bank Canterbury, Mr Richard Bray, said yesterday that his bank had not yet made any decision to increase its rates. The bank was looking closely at the market. The National Party’s finance, spokesman, Mr George Gair, has claimed that the latest round of interest rate hikes put the Government’s credibility into a nosedive. In November, the Minister of Finance, Mr Douglas, had predicted

that rates would drop sharply in the next six to 12 months, Mr Gair said. Mr Douglas had neglected to add that rates would start to rise again after they fell, Mr Gair said.

The president of the Canterbury - Westland branch of the Real Estate Institute, Mr Kent Prier, said that yesterday’s-rises would not have a dramatic effect on property sales. He said the rises were a “temporary hiccup” and

he expected to see interest rates drop later in the year. The increases in lending interest rates were a direct result of high and sustained increases in the cost of deposit funds, according to the ANZ’s managing director, Mr Brian •WfkAIKJ ’ ’ ’ The’ ANZ’s base rate, which covers overdrafts, term loans, personal loans (including second mortgages) and fully drawn advances, would rise to 19 per cent on Thursday. . The housing mortgage

rate for existing loans to ANZ customers with deposit support becomes 18.5 per cent, and 19.5 per cent for all others. These rates would become effective from January 20. For new first mortgage loans for owner-occupied housing to customers with deposit support, the rate now is 19.5 per cent Other borrowers will pay 20.5 per cent. The National Bank’s base rate rise will take effect as of- - Friday.

National’s home mortgage interest rates increased 0.5 per cent to 18.25 per cent for new lending and for loans now being reviewed. The chief executive of the National Bank, Mr Jim Macaulay, said the bank decided late last year to hold mortgage rates in spite of increases in deposit costs.' “The continued upward movement in the cost of funds to the bank however, has made today’s adjustment unavoidable,” he said.