MORATORIUM MORTGAGES.

New Zealand Herald, Volume LX, Issue 18374, 14 April 1923, Page 8

MORATORIUM MORTGAGES.

The mortgages moratorium will expire on December 31, 1924; that date has been irrevocably fixed for "an absolutely final winding up" of the moratorium period. There have always been fears of the consequences of terminating the moratorium, and to-day there are not wanting prophets of calamity if mortgagors' are called upon to discharge their obligations unless the Government comes to their rescue. This anticipation of injurious financial disturbance overlooks several important factors in the situation. In the first place, the moratorium does not apply to mortgages made after October 24, 1919, and it certainly does not apply to all those made before that date. A large sum within the scope of ! the measure has been removed by actual discharge, another large km comprises loans* which will not reach maturity within the moratorium period. But the most important factor during the whole period has been the private agreement for renewal of mortgages for fixed terms extending beyond the moratorium's final date. So long ago as September, 1919, Sir Francis Bell, himself the author and chief advocate of the moratorium, declared that "in the vast majority of cases agreements have been made for renewal for fixed periods." That process must have continued at least until the announcement of the 1921 extension, so it is reasonable to conclude that what Sir Francis Bell described as a small minority in 1919 has been further reduced. The first necessity would seem to be accurate information as to the dimensions of the problem to be faced at the end of next year. It is obvious that the Government cannot begin to consider measures of relief .until it has ascertained approximately the amount of mortgages in respect of which the mortgagor still holds off the mortgagee with the moratorium. Eaually obvious is the prospect of a substantial curtailment of the amount of mortgage debt that now remains within the security of the moratorium. The enormous increase in registered mortgages during recent years does not represent only actual transactions in credit from lenders to borrowers, but includes the inflated profits of the speculation period which were literally written on paper in the shape of subordinate mortgages from vendor to purchaser. Whether the solution of the moratorium problem is to be found in Government assistance or from the ordinary resources of the country, it is positive that no measure of inflation can be consolidated. The change from moratorium to normal conditions will inevitably be made upon a basis of conservative values and with a safe margin between valuation and loan. The Prime Minister has hinted at an extension of the State Advances system as a means of relief, but a prudent consideration of all the circumstances suggests that the Government's assistance must be limited, and that the parties to moratorium mortgages would bo wise to examine carefully and sympathetically the possibilities of adjusting the existing contracts to the altered conditions, and by mutual agreement remove themselves from the scope of the disturbance so generally anticipated. The chief point for consideration by mortgagees individually is whether they can make better terms by personal negotiation with their creditors than they are likely to obtain from a review of their contracts by departmental officials or financial institutions to whom the task of liquidating the moratorium will otherwise fall.