RATES OF INTEREST

Evening Post, Volume CXL, Issue 132, 1 December 1945, Page 8

RATES OF INTEREST

THE RECENT REDUCTION

"The building society movement, in common with the investment companies, has suffered a set-back in a reduction in deposit interest rates recently imposed by Order in Council," said the chairman of the National Permanent Building Society (Mr. Malcolm Fraser) at the annual meeting yesterday.

"When in 1941 the maximum interest rate which might be paid was reduced from 4 per cent, to 3 per cent., the reduction was accepted philosophically because it was realised that the war effort should suffer from no competition, and that it was to the common good that money should be raised for war purposes at the lowest possible rate of interest. By the latest order, the best rate becomes 2£ per cent. —for a three years' deposit—the same as the savings-bank rate for call deposits.

"In building society circles there is speculation as to the motive behind this action. The housing shortage is so tragic that . every organisation which can contribute money, experience, technical skill, or equipment in the building and allied industries is needed to bring its full weight to bear. Yet, the building societies are being deprived of the means of giving the assistance which they are so well fitted by long experience to give.

"Speaking of building societies generally as I know them, I can say that the profit motive is not the actuating force. The first consideration is to assist the greatest number of people that available funds allow to procure and pay off their own homes. Admittedly profits have to be earned, but it is incorrect to regard the true building society as a profit-making concern. Were this not so the attitude of the Government would be more easily understood.

"The order means, of course, that money which would come to the building societies and money which they now hold will be diverted to the Post Office Savings Bank and other channels; that the building societies, which have done so much in making it possible for people of small means to acquire their own homes, are to be discouraged instead of encouraged; that the Government is determined to pursue its policy of building rental houses in preference to allowing people to build their own homes. There is a threat in this simple order not only to the building society movement, but also to our very way of life."