§ 2. Mr. Carterasked the Chancellor of the Exchequer if he will introduce legislation to ensure that increases and decreases in interest rates charged by building societies are introduced at set intervals in relation to Bank Rate.
§ Mr. HigginsNo, Sir.
§ Mr. CarterDoes not the Minister agree that it is an intolerable situation which allows building societies to increase mortgage repayments when Bank Rate is increased but not to move with the same rapidity concerning mortgage repayments when Bank Rate is reduced? Is it not time that the building societies or, if not the societies, the Government took action to remedy this entirely unjustified situation?
§ Mr. HigginsWe have discussed this matter at Question Time on a number of occasions. I maintain the position which I have maintained previously, namely, that this is a matter for the building societies. The connection between Bank Rate and the rates which building societies both pay and charge is rather more tenuous than the hon. Gentleman suggests.
§ Mr. McCrindleWould not the acceptance of the proposition of the hon. Member for Birmingham, Northfield (Mr. Carter) substantially limit the freedom of building societies to balance the need to attract funds from investors with the provision of funds for house purchase by prospective buyers? Is it not clear that no building society holds its lending rate any higher than is necessary for one day longer than it feels it must?
§ Mr. HigginsIt is very important to appreciate the fact that if building societies are to have adequate funds to meet the demand for mortgages, they need to take account of the rates paid by other institutions with which they are competing.