MORTGAGE FINANCE.

Manawatu Standard, Volume LIV, Issue 291, 6 November 1934, Page 7

MORTGAGE FINANCE.

GOVERNMENT’S INTENTIONS,

THE PROPOSED CORPORATION

Per Press Association,

WELLINGTON, Nov. 5. In the course of a statement following the introduction of the Appropriation Bill in the House of Representatives to-night, the Minister of Finance (Rt. Hon. J. G. Coates) said that the mortgage problem was the last major item remaining to be dealt with in the financial rehabilitation of the Dominion.

Mr Coates said time did not permit of the National Mortgage Corporation proposal being dealt with this session, but he proposed to concentrate on it during the recess with a view to having legislation ready when Parliament resumes. So far the proposal had only been dealt with in broad outline, and a general discussion on the matter would be premature until definite proposals can be submitted. At the same time he would like to take this opportunity of removing one or two misconceptions that appear to exist. “The permanent objective that the Government has in mind,” said Mr Coates, “is a soundly organised system of Long-term mortgage finance based on tbe well-known mortgage bond system extensively used in other countries that will create a standard agricultural investment through which capital can confidently flow into the farming industry. By largely obviating the risks normally involved in individual mortgage investments and providing a security which is practically as liquid as Government stock, capital will he obtained at cheaper rates. This is the essence of the idea. “Concurrently, and in conjunction with the Mortgage Corporation, other measures will be proposed for dealing with the pressing problem of the financial rehabilitation 'of the farmers and others whose position has been rendered untenable as a result of the heavy fall in the prices of primarv products. I cannot give any details in regard to this aspect of the matter at present as the methods by which the rehabilitation is to be achieved are still under consideration. “I can 6ay quite definitely, however, that each case will be dealt with on its merits -and tlicrc will Lo notliing in th-e nature of general writing down or other reductions by legislation. Givensuitable machinery,- I have no doubt that the bulk of the cases can be dealt with by mutual arrangement between the parties concerned and I would stress this aspect of the matter. Hie remainder will lie dealt with by appiopriate judicial machinery. “So far as the National Mortgage Corporation is concerned, various proposals have been suggested, but people should not jump to conclusions that any particular features of these proposals are going to be adopted. Judgment should be suspended until the Government is able to bring down a considered scheme. It is fillly realised that the. success of the project depends upon obtaining the confidence of investors in the mortgage bonds and the House and the people can rest assured that the corporation will he organised on sound lines. . . “Furthermore, there is no intention of establishing anything in the nature of a monopoly of the mortgage business and if the parties concerned prefer it they will be able to continue making contracts for individual mortgages. We do feel, however, that proper organisation can narrow the margin that exists between the market rate for mortgages and for good stock exchange securities and in the interests of the whole Dominion we propose to set up that organisation. “This organisation will, it is hoped, stabilise lower rates of interest, but,provided concerns at present doing mortgage business are willing to do that business at market rates of interest, having regard to the nature of the security offered, there is no warrant for statements made that their business is to be taken away from them Mr Coates said that, as was indicated in the Budget, the mortgage problem was the last major Rem remaining to be dealt with in the hnancial rehabilitation of the Dominion. The difficulties to he overcome were recognised. but they could not hold baclf on that account as the job must be done. When it was done, however, our financial stability would be greatly increased to the lasting benefit of investors and tbe community generally.