STATE ADVANCES

Evening Post, Volume CVII, Issue 28, 1 August 1929, Page 13

STATE ADVANCES

RATE OF INTEREST

WHAT IS THE PRACTICE?

What policy does the State Advances Department follow iv fixing tlio interest on now loan applications which it may grant? This was tho question discussed in the House of Representatives yesterday between the Minister -of Finance (the Right Hon. Sir Joseph Ward) and Mr. W. L. Martin (Raglan) Replying to Mr. Martin, Sir Joseph stated that in all cases where the original mortgagor makes an application for an additional lonn tho rate of interest charged on the previous loan is not disturbed, and the borrower is charged tho current rato of interest on the further advance only. Mr. Martin's contention was that when a State Advances mortgagor who has an existing loan bearing interest at 4} per cont applies for a further advaneo the State Advances Superintendent, in some cases at least, cancels tho old rate of interest on the old loan and charges the present 6 per cent, rate on the amount of the old loan as well as on tho amount of tho new advance.

Sir Joseph said that anyone borrowing from the State Advances Offico, and later desiring to increase the amount of the loan must pay the current rate on the additional loan.

Mr. Martin said that the increased rato. was charged over the total amount of the two loans borrowed.

Sir Joseph: "No." Mr. Martin: "That is the position." He had a case in mind where this had occurred.

Sir Joseph: "I would like to sec the particular case referred to."

Mr. Martin: "I have the evidence here."

Sir-Joseph said that he would be glad to have it.

_ Mr. Martin: "Wo arc not objecting to increases on new amounts, but an increase over the old amount as well." , Sir Joseph: "The only answer I can give to that is this, that if tho old amount wore expiring and the applicant put in an application for a similar amount, plus an increased amount, then in all probability ho would be dealt with at the current rate of interest."

Mr. Martin: "That is not the i-osition. I will give you the information."

Sir Joseph: "We don't want any misunderstanding about it and wo do not want th,e Department to treat its clients other than reasonably."