AUCKLAND MONEY MARKET.

Otago Daily Times, Issue 20584, 6 December 1928, Page 13

AUCKLAND MONEY MARKET.

A GRADUAL EASING. SAVING BANK’S DECISION. MORTGAGE INTEREST RATE , REDUCED. ■ (Special to . Daily Times.) , ! AUCKLAND, December 5. The gradual easing of the money market which has drawn, comment from financiers in .recent ..months - took. a more definite turn at a meeting of . the trustees of the Auckland Savings Bank when it was decided to reduce the bank’s mortgage interest rate, -and also the Tate ,of interest on The resolutions' carried were as follow: \ - 1. That /the rate of interest .'on, all /mortgages completed on and after this ■ date he 6 per cent, per annum, and that this rate be chargeable on all current " afad'overdue mortgages as from January • 1. 1029. ■■■-.: ■■■.■.■■ -2. That subject to'the consent of the . Governor-General being obtained, '* and .the necessary three months ’■ notice haV- " ing .been, given in the. Gazette, the rate . 6f interest payable to depositors be reduced from' 4j per cent, per annum to 4J per cent, per annum as from April 1 next.

For ' many months past : it has been there is a Very, large surplus of capital in the Dominion seeking investment. There has been quite a number ■of oases where money has been loaned at reduced rates and. mortgages renewed, on a basis .more favourable to the mortgagor. Capitalists, still chary of lending!on-rural security, in spite of the greatly improved position of the farmer in-- the past two seasons, have-turned to city mortgages to find' the market flooded ‘with '.money. Shares have been eagerly bought up as one of the few remaining ■ avenues of investment until their price has been, forced to such'a level that thh return works out in many cases at a very low' rate. Thedecision of the Auckland Savings Bank to .reduce the rate of interest on mortgages by J per cent, will be regarded as .significant of the trend of the general financial situation. A leading city banker to whom the matter was referred was chary of expressing any opinion about the possibility of financial institutions generally following the lead of the Auckland Savings Bank. .. The fact that there remained a reluctance to lend on. rural security, was undeniable, be said. The action of the Auckland Savings Bank, 'as he interpreted it,-, was caused by the institution being overloaded with surplus ,funds which it found difficult\to invest. “There is an abundance of money about,, but trade has not yet' recovered sufficiently to promote further borrowing,” he said. Yet even although the mortgage business was slow, money in New Zealand was.a good deal .cheaper ; than in Australia,: as was evidenced .by the fact that ■ the Melbourne Metropolitan Board of Works borrowed money at 5J per cent, at the same time as a small body. like the Birkenhead Borough Council secured accommodation ht per cent,