INTEREST RATES.

Thames Star, Volume LXV, Issue 18242, 16 July 1931, Page 2

INTEREST RATES.

REDUCED HALF PER CENT. Government Take Action. PUBLIC TRUSTEE i] PER CENT. RELIEF TO DEBTORS. (Special to Star). WELLINGTON, July 10 Tli Prime Minister and the Minister oi' Finance (lit. Hon. G.. W. Forbes) has announced to-day that as the result of comprehensive negotiations, a voluntary arrangement had been agreed upon by the var .- ous financial authorities in the Dominion which will have the effect of cheapening the price of money. The present rate of 5:1 per cent. for over the counter sales of New Zealand Government inscribed stock or debentures will be reduced to 5 per cent, on Ist. August, 1931. In the meantime the same maturity date wAll be maintained, i.e., to Ist September, 1937. A readjustment in respect to rural advances bonds is under eousideral tion.

As has already been announced, the State-Advances Board will, insofar as its present mortgagors are concerned, grant sympathetic consideration to any*cases of genuine hardship that may be brought under its notice. Where circumstances warrant 'it the Board is also prepared to grant consideration where possible to extensions of the balance of the term of the loan whereby the half-yearly payments due by its mortgagors will be made less burdensome. The Public Trustee, in order to secure unanimity, will reduce by three-quarters per cent, the rate to be paid for new deposits by way of investment agencies hi the common good for a fixed term of years, and, in addition, will pass on the benefit accruing from such hew deposits to his clients. Current issues of local body securities in respect to unexhausted loan authorities will also be reduced by one-half per cent.

Sectkm 28 of the Local Bodies' Loans Act, 1926, which provides for a rate of interest or. local bodies' loans up to 5-J per cent, will be amended to reduce the minimum rate to 5 per cent. Section 114 of the same Act provides that the Minister of Finance may consent to an increase of thils rate, and such increase can be authorised by Order-in-Council. Negotiations in progress in respect to local body loans will, of course, be safeguarded. Banks Recvvce Interest. An announcement will be made by the associated banks in New Zealand regarding deposit and overdraft rates. The banks have had the matter under considerat |on. and have indicated that, provided the rates paid by other institutions on deposits are satisfactorily reduced the banks will reduce their rates on fixed deposits, and they will also make su'table adjustments in rates on advances. Similarly, the Public Trustee, savings banks at New Plymouth, liokitika, Diuiedin and Invercargill, have agreed to one-half per cent, reduction on present deposit rate.-:, and to -pass on the benefit to borrowers. The Auckland Savings Bank has agreed to reduce deposit rat is by one-quarter per cent., and lending rates by one-half per cent., he latter to apply not only to fiuuic but to current mortgages. It is proposed that these arrinn"tncnts will operate on and after the Ist August, 1931, which will necessitate a slight amendment to Section 23 of the Savings Banks Act. 1908, under which, in ordinary circumstances, three months' notice in the Gazette of alteration in interest on deposits is required. Building Society Shares. A decision that rates of interest on all future deposits and on mortgages be reduced by one-half per cent, has, been reached by the majority of the Building Societies throughout New Zealand, and it is confidently hoped that the rest will also fall into line. Investment, mortgage, trustee and deposit companies throughout the Dominion have also been approached, and generally have agreed upon a one-half per cent, reduction for new deposits, and to give the benelit accruing therefrom to their clients. Post Office Interest. The Post Office Savings Bank rate of 4 per cent., which has not varied since 1920, will be reduced on the Ist August, 1931, to 32 per cent., being the rate which operated in 1 (Continued in next column.)

1914, and a re-arrangement in respect to post ollice investment cerUlicates is under consideration. "For obvious reasons," remarked the Prime Minister, ''it has not been practicable to get in touch with all the vaiYjtaus trading companies in the Dominion which take deposits, but generally it is concluded from the view expressed on the subject that these companies will welcome the arrangement, both in their own and in the public interest, and will cooperate m the general reductions in the price of money." The Prime Minister said that he was grateful to the financial authorities concerned for the amount of interest and co-operation which had been shown in the matter. It clearly demonstrated, he said, that those authorities were anxious to bring about a general reduction of internal costs and so assist in the solution of the problem created by the general slump in prices for our products sold overseas. "Thus," concluded the Prime Minister, "the completion of an amicable arrangement amongst all concerned will, it is anticipated, lessen money costs for the future, and, in many cases where other commitments do not prevent it, borrowers will receive the benefit in respect to current mortgages."