MORTGAGE INTEREST RATE

Southland Times, Issue 24548, 24 September 1941, Page 4

MORTGAGE INTEREST RATE

REDUCTION SUGGESTED “The Government has certainly given a good lead to building societies by reducing the maximum debenture rate to 3 per cent., and investing shareholders, who are today receiving upwards of 5 per cent, on their shares, would have little to complain about if lending institutions throughout New Zealand, including building societies, reduced their lending rates by | to 1 per cent.,” said Mr Hugh Ritchie, secretary and a director of the Southland Building Society yesterday, when a suggestion that a reduction should be made in mortgage interest was brought to his notice.

The suggestion was made by Mr A. McMillan at the annual meeting of the Otago branch of the Real Estate Institute of New Zealand. His views were supported by Mr P. W. Stabb, and both speakers criticized the State housing scheme and the Government’s action in charging itself only 2.9 per cent, interest while lending money to tire public at 4| per cent. Mr Ritchie said that the comparison between the interest which the Government charged itself and tire interest which it charged the public was not on all fours with the general money market. The interest paid by the Government to the Reserve Bank was only an internal working charge, and the bulk of this money was used for the erection of State houses and was not lent to the public in the usual way. Dealing with the proposed reduction in mortgage interest, Mr Ritchie said that Southland could boast of having the lowest mortgage rate in New Zealand. It was from half to one per cent, lower than it was in the North Island. Nevertheless, he thought that a reduction in the lending rates of building societies and lending institutions throughout New Zealand would be advisable at the present time.