Mortgages (Interest Rates)

Oral Answers to Questions — Housing – in the House of Commons at 12:00 am on 24th November 1964.

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Photo of Mr Peter Walker Mr Peter Walker , Worcester 12:00 am, 24th November 1964

asked the Minister of Housing and Local Government what measures he will introduce to reduce interest rates for house purchase mortgages.

Photo of Mr Nigel Fisher Mr Nigel Fisher , Surbiton

asked the Minister of Housing and Local Government what plans Her Majesty's Government have for the reduction of mortgage interest rates for home owners; and to what level of interest they propose to reduce them.

Photo of Sir Raymond Gower Sir Raymond Gower , Barry

asked the Minister of Housing and Local Government what methods he will adopt to reduce mortgage rates for house purchasers.

Photo of Mr Richard Crossman Mr Richard Crossman , Coventry East

I have little to add to the replies given to my hon. Friend the Member for West Ham, North (Mr. Arthur Lewis) and the hon. Member for Norfolk, Central (Mr. Ian Gilmour) on 17th November, when I explained that I should wish to complete, with the local authority associations, the review of housing subsidies and finance, before any statement is made about interest charges on loans for local authority house building or on mortgages for house purchase.

I should make it plain, however, that help to intending owner-occupiers would require legislation and that there will not be time for that this Session—[Laughter.]—hon. Gentlemen had better hear the whole of the answer before they laugh. This will give time for the necessary discussions with the representatives of building societies about the way in which help can best be given.

Photo of Mr Peter Walker Mr Peter Walker , Worcester

Is the right hon. Gentleman aware that this reply will bring bitter disappointment to many people who are hoping to purchase a house? Is he also aware that after yesterday's statement about the Bank Rate these people will want a clear undertaking by the right hon. Gentleman that interest rates on mortgage repayments will not rise as a result of this Government's action? Will he also confirm that any action will treat all people alike and not favour those who want new mortgages?

Photo of Mr Richard Crossman Mr Richard Crossman , Coventry East

I ask the hon. Gentleman to make a distinction between the long-term problems which I want to discuss with the building societies and the short-term problem of interest rates in the present economic crisis. It should not be assumed that the increase in the Bank Rate will be followed by similar increases in other long-term rates, and I am very encouraged to see that representatives of the building societies have already made this clear. With regard to the long-term issues, we have made and shall keep our pledge to introduce special advantages for new mortgages. As I say, we need to discuss this with the building societies. We have started doing so and we shall complete the job, and then legislate, in the next Session.

Photo of Mr Nigel Fisher Mr Nigel Fisher , Surbiton

In view of the 7 per cent. Bank Rate, would it not be realistic to acknowledge that building society rates are virtually certain to have to go up in the near future? In view of that, has the right hon. Gentleman a two-tier system of interest rates in mind? Will it have to be subsidised by the taxpayers? If so, what will it cost and what level of mortgage interest has he in mind as the subsidised rate?

Photo of Mr Richard Crossman Mr Richard Crossman , Coventry East

The hon. Gentleman alleged in his supplementary question that rates of interest for building societies were bound to rise now. I should like him to notice that Mr. Lewis Cohen, Chairman of the Alliance Building Society—[Laughter.] We will start with him. He said, "It is too early to say. It all depends on how long 7 per cent. lasts". The Woolwich Equitable Building Society said, "It is only a temporary measure. It should have no effect at all on the rates charged to borrowers." Hon. Members opposite should not jump to the conclusion that this is bound to happen. Surely it is sheer commonsense to wait and to see what is going to happen before insisting that these rates will go up. I see no reason why they should, as a result of measures taken to prevent speculative attacks on the £abroad.

Photo of Mr Arthur Lewis Mr Arthur Lewis , West Ham North

The Minister referred to a previous Question by myself. Is he aware that for 13 years I put similar Questions and never received a satisfactory Answer until today? I am very pleased indeed, but I had to wait 13 years before I got a favourable Answer.

Photo of Sir Raymond Gower Sir Raymond Gower , Barry

Is the right hon. Gentleman aware that many people in this country were induced to vote for his party by a promise that they would have a reduced cost of house purchase almost immediately? If he introduces the system which he mentioned, will there be any restrictions on a person reselling such a house, obtained at a cheap mortgage, at a profit?

Photo of Mr Richard Crossman Mr Richard Crossman , Coventry East

It is, of course, quite untrue that our commitment was to introduce this immediately. In our priorities the first thing we had to do was to help the pensioners and the sick. That was an absolutely correct thing to do. We tell our borrowers that in good time we will carry out the whole policy. This is a five-year policy which we have, not a four-week policy.

Photo of Mr John Boyd-Carpenter Mr John Boyd-Carpenter , Kingston upon Thames

Is the Minister aware that very clear assurances were given both by the Prime Minister and by the First Secretary of State, that they aroused very definite expectations among a very large number of people and that his statement that nothing is to be done at least for a year, taken against the inevitable effects of yesterday's announcement, will constitute what many people in this country will regard as a breach of faith?

Photo of Mr Richard Crossman Mr Richard Crossman , Coventry East

It is the right hon. Gentleman's own interpretation, quite contrary to what I said, that nothing will be done. I said that time would be used for a very important job, which is to work out with the building societies the best way of doing this. This is a job which we shall do, and there is no kind of withdrawal from our commitment in what I said—none whatever.

Photo of Sir Raymond Gower Sir Raymond Gower , Barry

On a point of order. In view of the extremely unsatisfactory nature of the reply, I beg to give notice that I shall seek to raise this matter on the Adjournment at the earliest possible moment.