Mortgage finance options ‘needed’

Press, 28 July 1987, Page 8

Mortgage finance options ‘needed’

The Government must look at introducing alternative forms of mortgage finance, says Mr Peter Cook, president of the Real Estate Institute.

Under present high interest rates, mortgage finance was hard to repay for mortgagees. Mortgage bonds were one alternative, he said. When those funding mortgages lent finance the money was tied up for long, fixed periods. This did not encourage lending for housing. Mr Cook said that with bonds people funding mortgages could secure their money by way of bonds in small parcels. A mortgage could be split into 10 parcels of $lO,OOO, each of which could be traded separ-

ately. The mortgagee would still get the mortgage but his creditor would not be fixed. “This would encourage more money into the mar-

ket. It would become more like the stockmarket where investors could trade the parcels — it’s a much more mobile form of investment than a straight mortgage.” The Government should also introduce tax incentives into rental accommodation. Property investors should be given incentives to invest in more housing so the rental market could be covered, he said. This would see provision for more rental accommodation to house those the Government could not.