MORTGAGE FINANCE

Dominion, Volume 28, Issue 111, 4 February 1935, Page 8

MORTGAGE FINANCE

Two Measures For Parliament BUSINESS MEN’S VIEWS Mortgage finance is the main topic in political circles, with much conjecture as to the reception likely to be given the legislative proposals of the Government, as prepared by the Minister of Finance, Rt. Hon. J. G. Coates. As already explained, two Bills will be necessary to deal legislatively with the question, and the framework of both has been completed. It is expected that the Minister, who has discussed the bristling problem with representatives of every interest concerned, will finalise the measures this week. Apart from Ministerial and even general political opinion on the subject, there is a keen conflict of views among business men and several representatives of the legal profession. Those who have been questioned on the subject agree that some legislative action is necessary for the rehabilitation of farming finance and for placing mort.gages- generally on a sounder basis, but it is pointed out that until the Minister of Finance has disclosed the basic rate of interest, comment must be tentative and more or 16ss in the nature of guesswork. As far as legal opinion has been ascertainable it appears to be divided into two camps, one being determined from a sectional point of view, and the other from‘the viewpoint of the general welfare of New Zealand. There is some doubt, for instance, as to how far the legislative proposals dealing with mortgage finance will affect detrimentally the business of lawyers. One legal critic pointed out that Mr. Coates’s proposals in pamphlet form undoubtedly meant that instead of a man having'to renew his mortgage every three or five years, with all the incidental expenses involved, lie now would have a longterm mortgage to be paid off at the end of, say, 30 or even 35 years. Then, as the proposed bonds would be a sound investment, and the National Mortgage Corporation empowered to lend up to 70 per cent., it seemed obvious that many legal firms would lose some of the investing business they had done in respect of farm mortgages, particularly in view of the fact lliat their trustee securities had a limit of 66 2-3 per cent. Moreover, if Mr. Coates, as suggested,' proposed to take productive value, not market value of the land, as the basis, and also allowed wages for the farmer and his family before arriving at the mortgage load a farm could carry, it looked as though very conservative advances would be made. “Individual interests have or should have nothing to do with the question,” a political lawyer remarked. “It goes without saying that both financial and legal business will be affected by Mr. Coates’s proposals, but they should not be judged from that point of view. The whole country knows it is suffering from inflated land values and reckless borrowing. Both the mortgagee and mortgagor are now reaping the whirlwind. It is to be hoped that the projected Mortgage Corporation will be established as a .sound concern with adequate reesrves, and with all State Advances mortgages guaranteed, so that the corporation’s bonds will be the safe investment for which everyone is looking. If, is time the problem was tackled, and it is to be hoped that the Minister of .Finance will resist all efforts now being made to prevail upon him to drop his important proposals.”