INTEREST RATES

Poverty Bay Herald, Volume LXIII, Issue 19131, 28 September 1936, Page 8

INTEREST RATES

RISING TENDENCY DUNEDIN EXPERIENCE PAST VEAR'S OPERATIONS l>v comparison with pasl loan-raising activities the lilling of loan requirements by the Dunedin City Council in liic past fiscal year was without precedent, the town clerk, Mr; '!. A. Lcwin, ituted in his annual report. "I. venture the opinion that unless the future provides an example of the .I'iuinph of hope over experience they will long be so regarded," Mr. Lcwin added.

"'I lie new low level of interest current, at the opening of the year, in April, 1935, continued for the greater pari of that year, but moved up a shade at the close. \t March, 193(>. the upward tendency, however, was not particularly pronounced, and the city was successful with ;)ie balance of its water extension loan. At that time the amount'required was .B 130,000, and this was raised at an interest rate of 3.1 per cent for the full sanctioned term of 25 years, as against the 3{ per cent rate prevailing during the greater part of the previous year. "It would seem, however, that the low rate of 3.', per cent has broken, and the city was exceptionally fortunate in needU'.; loan accommodation at a period of record low level rates."

There was an old Scottish adage, continued Mr. T.ewin. which was quoted as a guide to investors, to the effect that when interest was low the investor should "buv short," while when interest, was high he should "buy long." The wisdom of the advice was fairly obvious, and to be equally prudent the converse course should govern th:- action of the borrower; The downward (rend of interest rates on the city's loan liability had been strikingly marked during recent years. Mr. r.ewin said, and the average rate over (he whole of the loans for the respective years was:—l93o. £5 5s Id per -em ; 1931. £5 4s 9.U1 per cent ; 1932. C 5 3s 2.U1 per cent: 1933. £4 8s .6?r] per cent,; 1934, £4 8s Old per cent; 1935, ,£4 3s 3|d per cent- 1936, £4 3s Oid per cent.