FARMERS’ FINANCE.

Star (Christchurch), Volume LXVI, Issue 20538, 13 February 1935, Page 7

FARMERS’ FINANCE.

Alteration in Mortgage Corporation Plans. PARLIAMENT RESUMES. (“ Star ” Parliamentary Reporter.) WELLINGTON, This Day. Faced with the task of passing i several Bills of major importance Par- f liament resumed its labours this after-1 noon after the summer recess and will 1 sit for five weeks. * The main business was the introduction of elgislation providing for the establishment of the National Mortgage Corporation. The original proposal was that the Corporation was to be a /body corporate with a capital of £1,000,000, to be offered for public subscription with a dividend limited to 4* per cent cumulative, but now there is likely to be some alteration in the original intention. Consideration has been given to making the institution a purely State organisation with no outside capital. Whether this suggestion has been adopted or not is uncertain, but it is reported that if outside capital is to be admitted the dividend will be less than 4i per cent. The argument in favour of a purely State organisation has been advanced by the farming community, which desires the lowest possible rate of interest on mortgages. It is contended that if the institution is fully State guaranteed, without shareholder capital, the bonds which it is proposed to issue will be in the same category as gilt-edged securities, the ruling rate for which is at 4 per cent downwards. The elimination of shareholder capital means that the Government have to find additional reserves for the Corporation and if the State gives a full guarantee the interest rate should be on a par with the rate on other Government securities. If, as is believed, the loans on first mortgage are to be for an amount not exceeding 66 2-3 per cent—instead oFTO per cent as proposed—it means that a portion of many State mortgages will not be taken up by the Corporation. Under the advances to settlers scheme a 75 per cent margin is allowed and as the State is the mortgagee to the extent of about £75,000,000 any lowering of the margin of equity which the Corporation covers means additional embarrassment to State lending institutions. It is understood that legislation for the rehabilitation of the farming community is to undergo radical alterations.