PAYMENT OF RATES.

Star (Christchurch), Volume LXVI, Issue 20540, 15 February 1935, Page 7

PAYMENT OF RATES.

Corporation’s Liability Explained. “ Star ” Parliamentary Reporter. WELLINGTON, This Day. Interest rates payable by mortgagors of the Mortgage Corporation and the liability of that institution for the payment of local body rates were the subject of a further explanation by Mr Coates in the House today. _ The Minister said that the introduction of private shareholder capital was a method of giving investors security stronger and more attractive than any other method. He said it had been suggested that there should be a State guarantee, but it was not possible for New Zealand, if it wished to preserve the value of its existing and future securities, to give a general blank guarantee, but by the Crown providing half the capital and putting in reserves he believed, after the closest discussion with investors in New Zealand, that it would be possible to borrow money at the gilt-edged rate and give borrowers finance at the cheapest rate it was possible to get. If the corporation raised funds at 1 3 per cent the rate of interest to bor- • rowers would be £4 12s 9d over fifty I years, after allowing 1 per cent for 1 management and making provision for a sinking fund. It was anticipated, however, that it would be possible to reduce the cost of management to 2 per cent as soon as the institution was under way, and in that case the interest rate to borrowers would be £4 Bs. If the interest on the bonds issued by the corporation were 3J per cent and the cost of management were 5 per cent the rate of interest on mortgages would be just over 4£ per cent. Discussing the question of local body | rates, the Minister made it clear that ' the corporation would be liable for rates on- new mortgages, but in relation to existing State Department mortgages taken over the position would remain the same and the corporation would not be liable for the rates on them. Under the rehabilitation proposals to be submitted to the House next week rates would be placed in the first category of liabilities to fall upon the receipts of the farmer. That was, rates would rank alongside interest in the foreground of liabilities to be. met.