STATE LENDING

New Zealand Herald, Volume LXXIII, Issue 22538, 1 October 1936, Page 13

STATE LENDING

WOIIK OF CORPORATION NEW AND OLD LOANS MORTGAGE ADJUSTMENTS IMPROVEMENT IN RECEIPTS [BY TELEGRAPH —SPECIAL REPORTER] WELLINGTON, Wednesday ' A *total of -1131 applications for loans was received by the Mortgage Corporation of New Zealand, now the State Advances Corporation, during the period from September last year, when active lending operations started, to March 31 of this year. This is revealed in the annual report of the chairman of the board of the corporation, which was tabled in the House of Representatives to-day by the Minister of Finance, the Hon. W. Nash. Of that total 2098 were classed as residential applications and 2033 were for farm loans. 1 The total amount of the loans applied for under all headings was £6,313,925 and of that sum £-1,582,300 involved applications for farm loans. The loans which were authorised and the amounts in each case were as follows:—Erection of dwellings, 353, amount, £238,585; refinancing, etc., 662, amount, £520,630; total farm authorisations, 824, amount, £1,876,065. Grand totals, 1859 applications; amount, £2,635,280. The board of management declined 518 applications for loans totalling £726,055. Many Unsuitable Applications The report points out that in addition to the applications declined after detailed consideration a large number were obviously unsuitable, and did not merit detailed reports. The applications declined as unsuitable were:— Residential, 515, amount, £617,425; farms, 566, amount, £1,280,829. Applications aggregating approximately £1,034,000 were being investigated at March 31, 1936. Dealing with the policy followed in its lending operations the report states that the provision in the Mortgage Corporation Act allowing the board to make advances in excess of the twothirds margin subject to guarantee by the Minister of Finance had been found very useful and helpful in practice.

Reference is also made to the adjustment of approximately 44,000 mortgages, which the report describes as a work of considerable magnitude. Offers of adjustment had now been made practically to all mortgagors and up to March 31, 1936, mortgagors totalling 17,296 had notified their acceptance and their accounts had been adjusted accordingly. Concessions to Mortgagors The board had decided that advantage should be taken of the opportunity of capitalising arrears and thus giving mortgagors a fresh start. Normally the capitalisation of arrears would have resulted in increased halfyearly payments under the mortgage, but this tendency had been offset wherever possible by the extension of the term of the mortgage. The aim had been to place mortgagors in such a position that, notwithstanding the capitalisation half-yearly payments had been reduced rather than increased. The board was hopeful that as a result of these concessions, mortgagors would in future be more able to meet their obligations to the corporation. Referring to interest due in respect of mortgaged securities other than local body securities, the report states that the position has shown a marked improvement during the last three years. The percentage of receipts to interest due in 1933 was 79.48, in 3934-35 it was 89.43 and for the eight months to March 31, 1936, it was 95.16. The Collection of Rents The corporation had 3904 urban and suburban securities 011 its hands on March 31, 1936, all but 31 being occupied. The rental collected from August 1, 1935, to March 31, 1936, was 96.51 per cent of the rental payable and 86.08 per cent of the gross instalments of principal and interest payable. The report records with pleasure that the corporation has been able to show a return of approximately 2\ per cent to the Crown on the contingent liability account.

The accounts disclose a gross revenue from all sources for the eight months of £1,165,261, from which must be deducted £673,383 in respect of interest on stock issued to the Minister of Finance and debentures issued to the public. This makes the gro.& profit £491,878. Management expenses and other charges, including additional provision for overdue interest, amount to £149,992, leaving a net profit of £341,993. Demand for New Loans It is pointed out that the capital outstanding on mortgage 'accounts is £37,185,034. The average loan on residential securities is £564 and on rural securities £llsO. Government and local body securities stand at £3.014,391, representing principally the investments of the reserve fund. All these securities are stated to be quite satisfactory. The cash position is also satisfactory, but with the demand which now exists for new loans, further capital may be required within the next few months. An addendum to' the report, dealing with the business of the board up to Juno 30 of this year, states that the total applications tip to that date from the inception of activities numbered 5659 for a sum-totalling £8,146,945. Of this amount, nearly £6,000.000 was for farm applications. The total number of loans authorised was 2893 for a sum amounting to £3,917,355.