§ Mr. WRAGGasked the Minister of Agriculture whether he is aware that many farmers have outstanding loans from the Agricultural Mortgage Corporation at interest rates of 5 per cent. and over; and whether he will consider evolving a scheme for the reduction of interest on those lines?
§ Mr. ELLIOTAll the outstanding loans from the Agricultural Mortgage Corporation bear interest at either 5 per cent. or 4¼ per cent. exclusive of sinking fund charges. The rate of interest charged by the corporation to borrowers depends on the rate at which the corporation raised the Debenture Stock, the proceeds of which are used for long-term loans. It is consequently an essential feature of all loans made by the corporation that they are on definite terms for a long period, and I regret that I am not able to adopt the suggestion made in the last part of my hon. Friend's question. The corporation is at present lending, at a basic interest rate of 4¼ per cent., money that was raised on Debenture Stock issued at 1587W from 4½ per cent to 5 per cent., which cannot be redeemed before 1959, and which can be purchased in the open market at the present time only at a considerable premium.
§ Mr. WRAGGasked the Minister of Agriculture whether, since the Agricultural Mortgage Corporation was set up under the Agricultural Credits Act of 1928, any excess reserves have become available for the benefit of borrowers, in accordance with a scheme provided under Section 4 of that Act?
§ Mr. ELLIOTThe question of the utilisation of any excess reserves in accordance with the provisions of Section 4 of the Agricultural Credits Act, 1928, will not arise until the Agricultural Mortgage Corporation has repaid the whole of the sums advanced from public funds to the guarantee fund. So far no part of these advances has been repaid.
§ Mr. WRAGGasked the Minister of Agriculture what is the interest charged by the Treasury at the present time on money advanced to the Agricultural Mortgage Corporation; what is the interest charged by that Corporation to long-term borrowers; and whether there is any possibility of arranging, in the near future, for a further reduction of the interest rates charged by the Corporation?
1588W
§ Mr. ELLIOTIn accordance with the provisions of Section 1 (1) (i) of the Agricultural Credits Act, 1928, advances by the Treasury to the Agricultural Mortgage Corporation for the purpose of establishing a guarantee fund are free of interest for a period id 60 years. As regards the second part of the question, the basic rate exclusive of sinking fund charges is 5 per cent. on loans granted before 16th April, 1934, and 4¼ per cent. on loans granted since that date. With regard to the last part of the question, I am advised that the Corporation sees little possibility in the near future of making a further reduction in the interest rate.