MORTGAGE MARKET

Poverty Bay Herald, Volume LX, Issue 18181, 31 August 1933, Page 5

MORTGAGE MARKET

EFFECT OF LEGISLATION MONEY PLACED ELSEWHERE The harmful effect of legislative interference on the market for farm mortgages is referred to in the annual review of Pyne, Gould, Guinness, Limited, Christchurch. The review states: —‘'It has become noticeable that as mortgages are paid off or readjusted the repaid capital is reinvested in Government stocks and bonds or placed on deposit with banks at a low rate. The effect of this money being forced out of the mortgage market is to deprive the man on the land of a portion of the financial aid so_ necessary to him, and at the same time to create a false impression of a cheap and plentiful supply of money. “Following the 1920-21 _ depression a similar position arose. This contributed to the orgy of spending indulged in by Government departments and local bodies generally. The moral is _ that there should not be unduly restrictive legislation in respect of one particular class of investment such as mortgages. Although the protection of the Mortgagors and Tenants' Relief Act is necessary in the present crisis,, it should not be carried, so far as to cripple flhe average farmer in arranging satisfactory loans in the future. “Now appears to be the time to bring into force a system to popularise, investment. in farm mortgages by insisting on valuations based on the productive rather than sale value and to convince the Government that they must refuse to enact ‘panic. legislation’ which may influence in the future investments from jfnrm loans to other channels. ’