STATE ADVANCES LOANS

Taranaki Daily News, 13 June 1932, Page 8

STATE ADVANCES LOANS

ADJUSTMENT OF INTEREST.

BENEFIT OF RECENT ACT.

Owing to numerous inquiries made by State Advances mortgagors regarding the amount of interest they are to deduct when paying their half-yearly instalments, Mr. W. J. Jordan, M.P., recently asked the Minister of Finance, the Hon. W. Downie Stewart, for his ruling on the point. In his letter Mr. Jordan pointed out that the notices issued since the reduction. of interest legislation was passed did not show any alteration of rates of interest, although it was stated in the House of Representatives that where the rate 'was previously 6J per cent., reducible to 5 J per cent, if paid on the due date, it would now be 5J per cent., reducible to 5 per cent., if paid on the due date. So far no official instructions had been issued to postmasters to accept the le/ser amount from mortgagors. ■ In his reply, received by Mr. Jordan on Thursday, the Minister says: “I have to inform you that in all cases (with the exception of mortgages over chattels) where the gross interest rate payable exceeds 5 per cent., the' rate will be reduced to 5J per cent., subject to a rebate of J per cent, if the instalment is paid within 14 days of due date. That is, all gross rates over 5 j>er cent, will be reduced to 5 per cent, net for prompt payment. “The reduction applies only to interest accruing on and after April 1 last. As the notices in respect of instalments falling due up to May 31 were issued prior to the coming into operation of the Act, the mortgagors in these case? will be entitled to a reduction on the interest that accrued from April 1 to the due date of the instalment. The amount of the reduction will be credited to the next instalment unless the mortgagor demands a cash refund. As the reduction in these cases has been effective only over a very short period, the amount involved in each case will be small.

“As far as instalments falling due on and after June 1 are concerned, the notices will show the reduced interest, and will be endorsed to that effect. .The amount of the instalment demanded will be the amount payable and it will not be necessary for the mortgagor or the postmaster to make any deduction other than the usual deduction of the rebate for prompt payment.”