HC Deb 20 June 1967 vol 748 cc1404-6
19. Mr. Robert Howarth

asked the Minister of Housing and Local Government if he will make a statement on the results of his most recent discussions with the building societies on the question of lowering their lending rates of interest to private house buyers in view of the several reductions in the bank rate.

44. Mr. William Price

asked the Minister of Housing and Local Government what further discussions he has had with building societies with a view to reducing interest rates on home mortgage loans.

Mr. Greenwood

I have had no recent discussions with the building societies on this subject. They are, of course, aware that the Government would wish them to reduce the rates charged to borrowers as soon as they find it practicable to do so consistent with the need to attract and retain funds adequate to sustain a rising private housing programme.

Mr. Howarth

Is my right hon. Friend aware that I find that reply very disappointing? Is he further aware that land, I presume, other hon. Members—have had letters from irate constituents drawing attention to the alacrity with which building societies increase their rates of interest when the Bank Rate rises but do not do the reverse when the Bank Rate goes down?

Mr. Greenwood

In fairness to the building societies, my hon. Friend should appreciate that their rates are determined by what they have to pay for the money which they borrow to lend to other people, and it is necessary to maintain that flow of supplies at present.

Mr. Price

Is my right hon. Friend aware that people are not impressed by academic arguments about the supply and demand of money? When will they get the low interest rates which they were promised?

Mr. Greenwood

I do not regard the flow of money as an academic consideration. As my hon. Friend is well aware, most mortgage payers are covered by Income Tax relief and others will be helped by the option mortgage scheme, which will substantially reduce the rate of interest paid.

Mr. Speaker

Mr. Lubbock, whose family anxieties are happily over. And we are very glad.

Mr. Lubbock

Thank you, Mr. Speaker.

Although we would like a reduction, would not the effect be that many people who wanted to borrow money during the rest of the year were barred because the funds were not available?

Mr. Greenwood

I would add my congratulations to the hon. Gentleman.

Yes, that would be the effect. Funds are flowing into the building societies satisfactorily and, as a result, their commitments are extremely promising. They were £81 million in October and rose to £146 million in May, which is very satisfactory.

Mr. Rippon

Further to the supplementary question by one of the Minister's hon. Friends about election pledges, when will the mortgage rate be reduced to the Foreign Secretary's 3 per cent., or even 4 per cent.? Does this Labour election pledge still stand on its head?

Mr. Greenwood

That is a very hoary one, even for the right hon. Gentleman, but perhaps he will study the debates on the option mortgages Bill.