LOWER BANK RATES

Manawatu Standard, Volume LIV, Issue 288, 2 November 1934, Page 2

LOWER BANK RATES

FIXED DEPOSITS AND OVERDRAFTS. OPERATING FROM TO-DAY. Per Press Association. WELLINGTON, Nov. 1. The following official statement was issued to-day bv the Bank of Australasia, the Bank of New Zealand, the Commercial Bank of Australia, the National Bank of New Zealand, and the Union Bank of Australia:— The rates of interest allowed on fixed deposits on and alter November 2 will be as follow:—Per cent p.a. On deposits for any period betweed 3 and 0 months If On deposits for any period from C to 12 months 1J On deposits for‘any period from 12 to 21 months 21 On deposits for 24 months 2j From November 30 the overdraft rates for best accounts will be reduced from the present rate of 5 per cent, per annum to 41 per cctit. per annum. For the reason that the Links will continue to pay higher rates on current fixed deposits until their maturity, it is necessary that some time should elapse before the interest rates on advances are reduced, but on this occasion the banks have shortened; to a great extent the customary period which intervenes between the reduction in the deposit and advance rates, and from the point of view of borrowers this is a very favourable feature in these latest reductions.

Commenting on the reductions, the chairman of the Associated Banks (Mr IS. P. Yaldwyn) stated that, in reducing the advance rates for l>cst accounts to 4/j per cent, from November 30, the banks were making a very real concession, especially as they would continue to pay interest at 31 per cent, until July, 1935, and 3 per cent, until July, 1930, upon very substantial portions of their fixed deposits. It had to bo remembered, lie stated, that overdraft interest was charged on the day-to-day balance of customers’ accounts, which made overdraft accommodation much cheaper than a fixed loan and, in effect, reduced the net rate to the borrower considerably below an equivalent mortgage rate. 'The rate of 4} per cent, per annum was the lowest rate over charged in normal cases by the banks in New Zealand for overdraft accommodation, although lower rates had at times been accepted by them in certain cases to relieve hardship. Tlio chairman of the Associated Banks also emphasised that, after Novenil>er 30, the minimum overdraft rate in the Dominion would compare favourably with those ruling in any part of tho British Empire, with the possible exception of certain isolated advances in England against ‘‘giltedged” securities. In Canada. South Africa and other parts of the Empire, the ra,tes charged by the trading banks were higher than had been the ease in New Zealand for some considerable time.

Tho result of the experiment in reducing the rates to their present low level would be carefully _ observed by the banks, stated the chairman, and it was hoped that it would tend further to increase confidence among the I arming and business communities.