United defers mortgage cuts, lifts deposits

Press, 26 October 1989, Page 27

United defers mortgage cuts, lifts deposits

The United Building Society has deferred a reduction in its mortgage rates due to have taken effect from December 1 and has increased its deposit rates. United has deferred indefinitely the reduction of rates on its U-Plan mortgages from 14.9 per cent to 14.7 per cent. The reduction was to have occurred on December 1. This follows the National Australia Bank lifting its mortgage interest rates from 14.2% to 14.65% last week.

United has also lifted the interest it pays on six month deposits to 12.5% from 11.75% and on three-month deposits to

12.5% from 12.2%. These rates apply to deposits over $5OOO, and on sums of more than $25,000 customers can negotiate rates of up to 13% for one to three month deposits. The move comes just as short-term and mediumterm interest rates begin to ease after firming, with longer-term rates, over the last month. Call rates were down sharply on Tuesday and 90-day rates were down about 0.2 percentage points.

Mr Richard Boulton, research partner of Hamilton, Hindin Greene, Christchurch, said the United move was a bringing of mortgage rates into

line. The mortgage rates of some banks had fallen to be in the range of the increased National Australia and steady United U-Plan rates, he said. Mr Tony Kunowski, United’s general manager, corporate affairs, said the reduction in existing UPlan rates had been deferred indefinitely because of continued firming of domestic interest rates.

Mr Kunowski said United believed the recent increases in wholesale rates were driven by temporary factors and that rates would then resume their downward trend.

“We will maintain our new U-Plan lending rate of 14.7%, but any further firming of rates may cause this to be readjusted upwards.”

Mr Kunowski said United had been forced to increase its retail deposit rates in response to the upward movement of the market. He said United’s longer term view remained unchanged. “We still believe that the combination of high business and consumer confidence, the Reserve Bank’s continuing commitment to its low inflation objective and a moderate wage round will ultimately be reflected in further interest rate decreases.”