HC Deb 28 November 1967 vol 755 cc208-10
2. Mr. Clegg

asked the Minister of Housing and Local Government whether he will now introduce legislation to promote the loan of money from public funds to building societies to assist them to advance mortgages on older houses.

The Minister of Housing and Local Government (Mr. Anthony Greenwood)

No, Sir. Building societies now have sufficient funds and should not need further assistance for this purpose.

Mr. Clegg

Would not the right hon. Gentleman agree that if the building societies are not doing the job at the moment, such legislation is really necessary in order to preserve our older houses?

Mr. Greenwood

The point the hon. Gentleman must bear in mind is that this year the building societies are lending about £200 million more than last year and that 17 per cent. of the loans being made are for houses built before 1919.

Mr. Rippon

Does not the right hon. Gentleman understand that the building societies are lending so much more because the prices have risen so considerably? Does he not recognise that there is a real need for help in respect of older houses?

Mr. Greenwood

I am sure that the right hon. and learned Gentleman is not suggesting legislation on the lines proposed by his hon. Friend. I think he may not have heard the point that I made, that 17 per cent. of the loans are being made for houses built before 1919.

11. Mr. William Price

asked the Minister of Housing and Local Government what recent discussions he has had with building societies with a view to reducing mortagage interest rates; and if he will make a statement.

Mr. Greenwood

I have had no recent discussions with the building societies on this subject. Building societies must balance the need to moderate their charges with the preservation of an adequate flow of funds for mortgages.

Mr. Price

Would the Minister tell the House what he regards as an acceptable level of mortgage interest charges after the latest financial shake-out?

Mr. Greenwood

Much more important than what I consider to be appropriate in this case is the statement of the Chairman of the Building Societies Association, who said that he does not believe that any alteration in the charge will be necessary this year, even after the recent increase in Bank Rate.

Mr. Graham Page

Is it not because of the good reserves of the building societies that they are able to keep the mortgage rates down for this period, and was it not stupid of the Chancellor to suggest that they should reduce those reserves?

Mr. Greenwood

Certainly not. The reserves have increased because no opposition was made to the raising of the rate when the Building Societies Association wished to do so. The Association appreciates the help that it has received from the Government in this respect.

Sir G. Nabarro

Does not the Minister realise that when Bank Rate was 6 per cent. the rate for new mortgages was 7⅛ per cent., or 1⅛ per cent. higher? Now that we have a Bank Rate of 8 per cent., is it not being postulated that the rate for new loans will be 9⅛ per cent.?

Mr. Greenwood

The House will be making mistake if it assumed that mortgage rates are always tied to Bank Rate. Over the last ten years there have been 27 changes in Bank Rate and only six in mortgage rates.