INTEREST RATES

Southland Times, Issue 21872, 25 November 1932, Page 7

INTEREST RATES

AMENDING BILL MORTGAGES. ON INSURANCE POLICIES PROPOSALS DOUBTED (From Our Parliamentary Reporter.) Wellington, November 24. Doubts whether the Government’s proposals for bringing mortgages on life insurance policies under the definition of mortgages for the purpose of interest rate reductions would be effective, were expressed by Mr W. E. Barnard (L., Napier) during the second reading debate on the National Expenditure Adjustment Amendment Bill in the House to-day. One purpose of the bill is to prevent these mortgages from being treated as chattels. Mr Barnard said that under the amending bill the mortgages of life insurance policies were not to be regarded as chattels. However, he was not sure that the desired result had been secured by the amendment in the bill. It had been stated there was still a loophole. By means of high insurance, companies could evade the intention of the original Act and also the present amendment. Under the provisions of the original Act, provision was made for a reduction of rates of interest payable on mortgages of property situated in New Zealand. It had been suggested however that companies which had their head, offices outside New Zealand could claim that a mortgage on an insurance policy did not come within the four corners of the main Act or in other words, that property situated in New Zealand was not affected. It would be a pity if after making such an heroic effort to brin r ’ insurance companies to heel, it were found that they could escape after all. Mr Barnard added that he thought a considered explanation should be given by the Government as to why bank mortgages, payable on demand, had been excluded from the provisions of the bill. He thought the time had arrived when they should know why the banks had been exempted, although bank mortgages were payable on demand. There were numerous cases in which the banks intended that mortgages should run on indefinitely and there was no reason why banks should not be brought into line with other people. If the banks decided to call up mortgages, the House should have something to say about it. Banks could be made to do the right thing if the Government of the day asserted itself. The Government had the power and the question was merely whether it intended to use that power.