DUNEDIN OPINION

Evening Post, Volume CIX, Issue 7, 9 January 1930, Page 10

DUNEDIN OPINION

EFFECT ON MOKTGAGES (By Telegraph.) (Special to "The Evening Post.") DUNEDIft, This Day. The manager of one of the leading financial institutions in the city stated that many local bodies still had debenture issues pn the market at 5J per cent., and this was the rate of interest offered. by tho City Council for- "over the counter" money. It would appear, therefore, that if only 5£ per cent, had been offered, at least in this part of the Dominion, there would have been a satisfactory response by the financial houses and the people generally as for a good period last year there had been a sound demand for debenture issues at 5-i per cent, and there was a satisfactory demand to-day. At any rate, he proceeded, interest at 5 3-8 per cent, would have proved quite attractive for a Government issue. BATES MUST HAKDEN. The result of the Government increasing the rate to 5$ per cent, would naturally be that interest rates would harden all round, continued the speaker. Last year there were signs that the mortgage rate of interest would be lowered, but that was now impossible. It might even be that the current rate on first mortgages would be increased beyond 6 per cent. The action of the Minister of Finance would doubtless result in a decrease in the flow of money for ordinary business purposes and have an effect on the prosperity of tho Dominion as a whole. The increase of the rate must have far-reaching effects on the operations of the financial institutions in New Zealand, he continued. It is known that some of these have committed themselves within the past few weeks to. the flotation of loans at 5J per cent., and they will now have to meet the difference between 5} and 5J per cent, themselves. The short term of the Government debentures and the T^'od interest rate will doubtless provo attractive to iiwestors. "We are going to have a higher level of interest rates," the manager concluded, "and that will not assist the prosperity of the Dominion."