Mortgages

Oral Answers to Questions — Housing – in the House of Commons at 12:00 am on 29th June 1965.

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Mr. W. T. Williams:

asked the Minis-of Housing and Local Government what progress he has made with a scheme to make mortgages more readily available to those wishing to buy their own houses and/or to reduce mortgage interest rates.

Photo of Mr Geoffrey Rhodes Mr Geoffrey Rhodes , Newcastle upon Tyne East

asked the Minister of Housing and Local Government what progress he has made in his discussions on the action he proposes to take to make mortgages more readily available to those wishing to buy their own houses.

Photo of Mr Frank Allaun Mr Frank Allaun , Salford East

asked the Minister of Housing and Local Government if he can now make a statement on progress in preparing his schemes to reduce interest rates for council houses and for houses to be bought for owner-occupation.

Photo of Mr Anthony Grant Mr Anthony Grant , Harrow Central

asked the Minister of Housing and Local Government what progress he is making towards easing the shortage of mortgage funds for house purchase and towards lowering the interest rate charged in respect of such mortgages.

Photo of Mr Paul Rose Mr Paul Rose , Manchester, Blackley

asked the Minister of Housing and Local Government what action he proposes to take to assist existing home purchasers currently paying off their mortgages.

Photo of Mr Richard Crossman Mr Richard Crossman , Coventry East

In debate on 29th April I made my view plain that both the relief of the interest burden on local housing authorities and steps to help owner-occupiers would have to take their place in a national housing plan, for which I would be developing proposals in the course of the summer. I am not yet in a position to make a further statement on this.

Photo of Mr William Clark Mr William Clark , Nottingham South

As interest rates are now running at between 6¾ per cent. and 7 per cent., has the Minister made any assessment of the cost of this subsidy to the Exchequer if there is a reduction in mortgage interest?

Photo of Mr Richard Crossman Mr Richard Crossman , Coventry East

Yes. This is one of the calculations we have been doing in preparation for the plan.

Mr. Williams:

Whatever my right hon. Friend's long-term plan may be, since some building societies keep their reserves liquid to as much as twice the percentage that they are permitted by law to do, will he not make some inquiry and use such influence as he has to have a shot at getting these building societies to release more money down to the level of their legal permission?

Secondly, with regard to the reduction of mortgage interest rates, has the Minister given consideration—and, if so, with what result—to the possibility of making available a rebate on Income Tax at the standard rate to people who do not pay Income Tax at that rate? That, at least, would be a means of reducing the burden on the lowest-paid people.

Photo of Mr Richard Crossman Mr Richard Crossman , Coventry East

The proposal in the second part of my hon. and learned Friend's supplementary question—the Merrett-Sykes proposal, as it is usually called—is one that we are considering. As for the first part, the Government, as my hon. and learned Friend knows, do not control the lending policies of the building societies. Though it is true, as he says, that, on average, it is fair to say that their liquidity ratio is about 14 per cent. as against the minimum of 7 per cent., the freedom to make these decisions rests at the moment with the building societies themselves.

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

Will the Minister give the result of the calculation to which he referred when replying to my hon. Friend the Member for Nottingham, South (Mr. William Clark)? Can he also assure the House that any improvements that he makes in arrangements for borrowers will relate back to, at any rate, this year, so that people shall not be discouraged, despite difficulties, in trying to take up mortgages now?

Photo of Mr Richard Crossman Mr Richard Crossman , Coventry East

I should require notice of the first part of the right hon. Gentleman's supplementary question. I shall be delighted to answer him if he will put down a Question. As to the second part, I am not prepared to discuss our intentions while they are under consideration.

Photo of Mr Geoffrey Rhodes Mr Geoffrey Rhodes , Newcastle upon Tyne East

Is my right hon. Friend aware that up to a few weeks ago there was an almost complete blockage of new mortgage money in the Tyneside area? I made a personal check with the leading building societies in the City of Newcastle. I appreciate that the position is now easing a little, but will my right hon. Friend treat the matter with some urgency? Owner-occupiers have had to put up with too many difficulties for too long, especially during the administration of the party opposite.

Photo of Mr Richard Crossman Mr Richard Crossman , Coventry East

We have, of course, every sympathy with owner-occupiers, and I am relieved to hear my hon. Friend confirm that the reduction of Bank Rate and the situation since has somewhat eased things for the building societies. It remains true that there are difficulties. What we would hope for is an improvement in the situation so that deposits will continue to advance in the building societies.

Mr. Gresham Cooke:

Is not the building societies' difficulty that the value of their reserves is now far less than when the Socialist Government came in?

Photo of Mr William Shepherd Mr William Shepherd , Cheadle

asked the Minister of Housing and Local Government if, when considering preferential rates of interest to house purchasers through building societies, he will take into account the position of those who are borrowers from local authorities at fixed rates as high as 7¾ per cent.

Photo of Mr Richard Crossman Mr Richard Crossman , Coventry East

I do not know of any local authority that is currently asking for as high an interest rate as this on house purchase advances. But I certainly intend to take into account the position of people who borrow from local authorities.

Photo of Mr William Shepherd Mr William Shepherd , Cheadle

Is the right hon. Gentleman aware that I was not concerned with current borrowing? May I have an assurance from him that all borrowers, whether old or new, will be treated alike by the Government in accordance with the true principles of Socialist democracy?

Photo of Mr Richard Crossman Mr Richard Crossman , Coventry East

I tried to answer the Question on the Order Paper, which was quite a different one.

Photo of Mr Frank Allaun Mr Frank Allaun , Salford East

When preparing his plans for future borrowers, to which we are looking forward very much, will my right hon. Friend take into consideration the German system, under which the first, say, £1,000 of the loan is completely interest-free, thus avoiding giving big subsidies to those buying mansions and luxury flats?

Photo of Mr Richard Crossman Mr Richard Crossman , Coventry East

On a previous Question I was asked whether I would take into consideration the various methods. I can say that we shall take into consideration all the possible methods before we decide between them.

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

Will not the Minister at any rate answer the Question on the Order Paper, which is whether his proposals in respect of mortgage rates will take into account those who borrow through local authorities?