Mortgage Interest Rates (Hansard, 11 May 1965)

§ 1. Mr. Hunt
asked the Minister of Housing and Local Government when he expects to be able to announce the Government's proposals for lower mortgage rates.

§ 18. Mr. Grant
asked the Minister of Housing and Local Government what steps he is taking to make mortgages 238 more readily available for house purchases; what steps he is taking to obtain a reduction in mortgage rates; and whether he will make a statement.

§ 30 and 31. Mr. Boyd-Carpenter
asked the Minister of Housing and Local Government (1) whether he is aware of the shortage of funds available for advances for house purchasing; if he will give the figures for mortgages granted for the latest period for which these are available; how these compare with those for a similar period a year previously; and what action he proposes to take;
(2) whether, in view of the difficulties now facing people seeking to buy a house, he will now make a further statement as to his policy on mortgage interest rates and on assistance to house purchasers generally.

§ 43. Mr. Gower
asked the Minister of Housing and Local Government when he plans to implement the Government's policy to provide low mortgage interest rates.

§ The Minister of Housing and Local Government (Mr. Richard Crossman)
As I stated in the course of the home loans debate on 29th April, the Government's plans for specially favourable interest rates relate both to the private and to the public sector of housing, and will be designed to bring benefit to the council house tenant as well as to the house purchaser. I hope to have proposals ready for discussion both with the building societies and with the local authorities in the near future.
As for the shortage of funds available for advances, I told the House a fortnight ago that building society loans in the first quarter of this year were actually higher than for the corresponding period last year. I am in touch with the Building Societies Association and I understand that net savings were higher in April than in March, and that societies made substantial advances during the month. The Association will be announcing the final figures for the month within a few days.

§ Mr. Hunt
That Answer is not good enough. Is the right hon. Gentleman aware that during the election campaign his Parliamentary Secretary, the hon. 239 Member for Bermondsey (Mr. Mellish), came to my constituency and said on the subject of mortgage rates that, whatever the Labour Party offered, it would never be as high as 6½ per cent.; it was the party's policy that it should be 3½ per cent., a more honest and honourable figure? Can the right hon. Gentleman suggest what I am to tell young people in my constituency and in other parts of the country who consider——

§ Mr. Speaker
Order. Perhaps the Minister had better answer as far as we have got.

§ Mr. Crossman
I could make suggestions on the latter part of the supplementary question, but they might be out of order. On the other part of the question, the speech of my hon. Friend the Parliamentary Secretary, I should have to look up exactly what he said. But I am sure that what he said was what we all said, which is that we are determined to introduce specially favourable rates for owner-occupiers and also for councils. I repeat that we are going to do it. I warn the Opposition that the more they build up on this the more they will find that when the proposals are made—and they will be made and announced this summer—they will be to the satisfaction of the people who put us into power and who expect us, as we shall do, to carry out this pledge.

§ Mr. Boyd-Carpenter
Is the right hon. Gentleman aware that builders are now cutting back their building programme because of the shortage of funds for house purchase? Has he seen the statement the Chairman of Wimpey's made yesterday that that company had been forced to do just that? Is he aware that this time of year is the most favourable time of year for building? What action is he taking to prevent a fall in the building programme this year?

§ Mr. Crossman
Yes, I can give the right hon. Gentleman some information on that subject. We have had a good many different statements by different builders. My right hon. Friend the Minister of Public Building and Works has had a very careful estimate of the actual situation in the building industry, which I think was announced today. The best calculation we make now is that the builders who had been talking in January of 280,000 starts are now talking in terms 240 of about 250,000 starts, which is the same as last year. The other thing I would add is that the number of starts does not determine the number of completions and it may well be—I have no reason whatever at present to doubt it—that the completions will be extremely satisfactory, at least to this side of the House, when they are announced at the end of the year.

§ Mr. Boyd-Carpenter
Does that answer mean that the right hon. Gentleman intends to take no step to secure improved output from the building industry this summer?

§ Mr. Crossman
I repeat what I said in the home loans debate. There is no evidence to justify the belief that special financial aid is required to be pumped into the building societies. This is the only concrete thing which we have been asked to do—to put it in there. We do not think that it is necessary now. We are preparing our plans for assisting the building societies and shall announce them in the summer.

§ Mr. Grant
Has the Minister's attention been drawn to the writer in the Daily Mail who said that he had to apply to four brokers, three building societies and three insurance companies, all without success, and ultimately had to get his mortgage at 18 per cent. over five years, through a finance house? Does he think that this is exaggerated? When he talks about owner-occupiers being helped, does that include those who have already been forced to buy houses at a high mortgage rate?

§ Mr. Crossman
I would fully sympathise with what appears clear from the hon. Gentleman's supplementary question—the determination he and I share to prevent ordinary people being forced to buy a house by a shortage, presumably, of houses to rent. This is why we are determined to increase the number of houses to let. [MEMBERS: "Answer."] I am answering the question asked by the hon. Gentleman, which was whether I approve of people being forced to buy a house when they might prefer to rent a house. The answer is that I do not. The other half of the question was whether I believed that the story the hon. Gentleman quoted which appeared in the Daily Mail was true. Of course I believe that it is true. I do not see why somebody should invent it. Of course it is 241 true that there is a difficulty now, a constriction in getting mortgages from building societies. I also noticed—in fact I cut this out of the paper—this statement made yesterday by the President of the Halifax Building Society: We are continuing to offer new mortgages at the rate of £3 million a week". That is the other side of the picture.

§ Mr. Gower
Does not the right hon. Gentleman recall that the last ten years saw a magnificent growth of home ownership in this country? Is it not a fact that what has happened since the last election and the way in which this trend has been halted has made a mockery of all that the Labour Party said at the last election?

§ Mr. Crossman
What the hon. Gentleman says simply does not correspond with the facts. The record for house building, measured by standards of completions or of starts, was achieved in the first three months of this year. What we are discussing is whether in April there has been a setback. We find that in terms of building societies there has been a considerable improvement in the situation. For instance, the liquidity ratio of the building societies—[Interruption.]—I ask hon. Members who ask me questions to wait for me to answer them. The liquidity ratio of the building societies, which is one of the tests which we must take most carefully, has, I gather, somewhat improved last month, so we can hope that movement out of the societies has been slowed down. Of course I do not think that the situation is wholly satisfactory—[HON. MEMBERS: "Oh."]—but the sensational remarks made by hon. Members opposite bear no relation to the actual facts of building now or of building society advances.