INTEREST RATES

Hokitika Guardian, 16 July 1931, Page 5

INTEREST RATES

REDUCTION ANNOUNCED STATEMENT BY PRIME MINISTER. (Per favour of Government.) WELLINGTON, July 16. The. Prime Minister and Minister of Finance (Rt. Hon. G. W. Forbes) announced to day that as the result of comprehensive negotiations, a v luntary arrangement had been ag eed upon by the various financial authorities in tie Dominion, which will have the effect of cheapening the price of money.

The present rates of per cent, for over the counter sales of New Zealand Government inscribed stock or debentures will be reduced to 5 per cent, on the Ist. August 1931. In the meantime. the same maturity date will lie maintained i.e., to the Ist. September, 1937.

A readjustment in respect to rur l advances bonds is under consideration.

As lias already been announced, the State Advances Bonrd will, in so fains its present mortgagors are concerned, grant sympathetic consideration to any cases of genuine hardship that may be brought under its notice, where circumstances warrant it. The Board is also prepared to grant consideration where possible, to extensions of the balance of the term of the loan whereby the half-yearly payments due by its mortgagors will be made less burdensome,

The Public Trust-©, in order to secure unanimity, will reduce by threequarters per cent., the rate to be paid for new- deposits by way of investment agencies in the common fund for a fixed term of years, and in addition will pass on the benefit accruing from such new' den-sits to his clients. Current tissues of local body securities in respect to* unexhausted loan authorities, will also 'be reduced by one half per cent. -Section 28 of the Local Bodies Loans Act 1926, which provides for a rate of interest on local bodies' loans up to 5.) per cent., will be amended, to reduce the maximum rate to 5 per cent. Section 114 of the same Act provides that the Minister of Finance may consent to an increase of this rate and such increase can be- authorised by order-in-council.

Negotiations are in progress jti respect to local body loans which will, of course, be safeguarded. An announcement w.Ti be made by the Associated Banks in New Zealand regarding deposit and overdraft rates. The banks have had the matter under consideration, and have indicated that provided the rates paid by other institutions on deposits are satisfactorily reduced, the banks will reduce thenrates on fixed deposits and they will also make suitable adjustments in rates on advances.

Similarly the Trustee Savings Banks at New Plymouth, Hokitika, Dunedin and Invercargill have agreed to a one half per cent, reduction on the present deposit rates and to pass on the benefit to borrowers. ,

The Auckland Savings Bank has agreed to reduce the deposit rates by one quarter per cent., and lending rates by one half per cent., the latter to apply, not only to the future, but to current mortgages.

It is proposed that these arrangements will operate on and after the Ist August, 1931, which will necessitate a slight amendment to Section 23 of the Savings Banks Act 1908, under which, in ordinary circumstances, three months’ notice is the Gazette of an alteration in the rates on deposits js ’required. A decision that the rates of interest on all future deposits and on mortgages be reduced by one half per cent, has been reached by the majority of the building societies throughout New Zealand and it is confidently hoped that the rest will also agree to fall into line,

Investment, mortgagee, trustee and deposit companies throughout -the Dominion have also been approached and generally have agreed upon a one half-per cent, reduction for new deposits, and to give the benefit accruing therefrom to their clients. The Post Office Savings Bank rate of 4 per cent., which has not varied since 1920, will be reduced on the Ist August 1931, to 31 per cent., being the rate which operated in 1914 and a rearrangement in rtspect to Post Office investment certificates in under consideration. For obvious reasons, remarked the Prime Alinister, it has not been practicable to get in touch with all the various grading companies in " the Dominion, which take deposits, but generally it is concluded from the views expressed on the subject that ..these companies will welcome the arrangement, both in the:r own and in the. public interest, and will co-operate in the general reduction in the price of money. The Prime Alinister said that he was grateful to.the financial authorities concerned for the amount of interest and co-operation which had been shown m the matter. It clearly illustrated, .he said, that those authorities were anxious to bring about a general reduction of internal costs, and to assist in the solution of the problem created by the general slump in prices for our produc s sold overseas. Thus, concluded the Prime Minister, the completion of an amicable arrangement amongst all concerned will, it * anticipated, lessen money costs for ih future and in many cases where oth committments do not prevent it, borrowers will receive the benefit in iesptc to current mortgages.