RATES OF INTEREST

Waipukurau Press, Volume XXVIII, Issue 132, 30 May 1932, Page 5

RATES OF INTEREST

legislation explained

BY HON. W. DOWNIE STEWART

The Minister of Finance thus explains in his recently issued statement the method of computing interest reduction. Te following are the essential points to be observed: — (1) The “basic” rate of interest which is made subject to reduction by the Act is the rate appropriate to January 1, 1930. (2) If the mortgage was actually in force on that date, but was not in force five years earlier (that is, on January 1, 1925), the basic rate is rate actually fixed in the mortgage. (3) When the basic rate is not known (that is, in the case of longterm mortgages entered into prior to January 1, 1925, or in the case of recent mortgages entered into after January 1, 1930, and before April 1, 1932), it must be ascertained. The alternative methods of ascertainment are those already referred to with respect to rents, namely: — (a) Mutual agreement by parties or

(b) Arbitration; or (c) Order of the Supreme Court or Magistrate’s Court, after reference to an Adjustment Commission. (4) The rate appropriate to January 1, 1930, having been ascertained in the manner above referred to, that rate is to be reduced by 20 per cent, thereof (subject to the provisions as to minimum rates referred to in the following paragraph), and the rate actually chargeable to the mortgagor for any period commencing on or after April 1, 1932, must not exceed the residue after such deduction has been made. It is to be noticed here that the Act is not an authority for an increase in the rate of interest actually chargeable on April 1, 1932, is less than the residue ascertained as aforesaid no increase in the rate of interest so chargeable is required or authorised by the Act. Exceptional Case.—lf in any exceptional case the rate of interest payable on April 1, 1 932, in terms of any mortgage is actually greater than the rate payable or that would be payable on January 1, 1930, the appropriate reduction is 20 per cent, of the rate as at April 1, 1932. It is thought unlikely that there are many (if any) such mortgages in existence. The provision is complementary to the provisions to the same effect made with respect to rents, where it may easily be that because of the altered use. of premises or for other reason a higher rent is chargeed at April 1, 1932, than was payable for the same premises on January 1, 1930.