OVERDUE LOANS

New Zealand Herald, Volume LXXIII, Issue 22574, 12 November 1936, Page 14

OVERDUE LOANS

MORTGAGE RENEWALS POSITION IN NEW YEAR RELIEF PROTECTION ENDS ATTITUDE OF LENDERS Lawyers and others interested in the mortgage market do not anticipate that any real difficulties will arise between mortgagees and mortgagors in arranging for renewals or extensions of mortgages after January 31 next, the date beyond which applications for relief under the Mortgagors and Lessees Rehabilitation Act will no longer be received. "No doubt many mortgagors who did not bother to secure formal extensions of their mortgages when they were given a certain amount of legislative protection will be required after January to do so," said one lawyer. "Naturally mortgagees like to arrange for a definite term for their investments. It is no advantage to them to have money loaned out for indefinite periods. But mortgagors need have no fears as to their position. There is no friction between mortgagors and mortgagees to-day, and there is nothing to indicate that anything but a reasonable spirit will continue to exist." Applications for Relief Lawyers were agreed that there was no evidence to suggest that the provisions for relief under the legislation were being availed of to any extent. They knew little, indeed, of the operations of adjustment commissions or courts of review set up under the legislation. It was pointed out that many mortgages had come into operation, so far as town property was concerned, since 1931 and the conditions did not exist in their cases to justify the seeking of relief. At present there is a very fair inquiry on the mortgage market for loans. Some months ago applications were being made for Government loans, but the restrictions imposed on borrowers were now proving unpopular, and so the inquiry had turned again to the private lender. The great objection by borrowers to Government loans was the provision against repayment other than according to the table prescribed, a condition apparently aimed to prevent sales of property and consequent speculation. Building Values Another unpopular provision was the condition against second mortgages, which stopped speculative building. Borrowers for house property loans were prepared to pay 5 per cent to private lenders, while institutions were lending mouey at 4A- per cent. Borrowers were finding a difficulty, however, in getting loans based on present building values, as lenders felt that these had been forced unduly high. They had a previous experience of artificially created values, and were not inclined to risk the chance of a subsequent depreciation. Where the values were considered sound there were no difficulties in securing loans, as money was abundant, a condition possibly contributed to by the present unpopularity of certain other forms of investment. Another marked attitude among mortgagees was a reluctance to advance money in workers' districts, this being due to effects of restrictive legislation in the past. No Need for Uneasiness "If I knew of any mortgagee-client who proposed to refuse to renew a mortgage after January I would give a tip to the mortgagor to prepare for eventualities," said one solicitor with a large mortgage business. " But I do not know of a single case of that description, and there is not the slightest need for any general uneasiness." Discussing another aspect of the attitude of investors, one man said there was a desire among many to transfer funds out of the Dominion. The high exchange operated against such transfers. The Prime Minister must be aware of the situation, and that if the exchange were lifted there would be an outflow of funds, mostly to South Africa. Many investors suspected that if the Labour Government in New Zealand were returned to power again that fact would have a big influence in Australia and inspire socialistic legislation there that would hit the investor, as he was being hit in New Zealand.