Mortgage Repayments

HC Deb 16 May 1973 vol 856 cc1488-91

10. Mr. Edwin Wainwright

asked the Secretary of State for the Environment what was the monthly mortgage repayment over a 25-year period of a loan of 80 per cent. required to buy an average modern house in June 1970; and what is the present-day comparable figure.

23. Mr. Ashton

asked the Secretary of State for the Environment what was the average weekly mortgage payment necessary to buy the average house in the East Midlands in June 1970, and what is the average payment today.

Mr. Eyre

No separate information is available on modern houses, as such. On the basis of an 80 per cent. mortgage for 25 years, the average net monthly repayment by all first-time purchasers on houses bought in the United Kingdom in the second quarter of 1970, was £19.75 in the first year. The comparable figure for houses bought in the last quarter of 1972 was £32.74. No reliable information for individual quarters is available on a regional basis.

Mr. Wainwright

That does not seem like cutting prices "at a stroke". Does the hon. Gentleman realise that due to the tremendous increase in the cost of houses, the increase in interest rates and the reluctance on the part of building societies to lend money to young couples, these young couples are being driven into buying third- and fourth-rate houses at a terrific cost and going to finance houses for loans which bear tremendous interest rates? When will the Government do something for young couples who need homes?

Mr. Eyre

The hon. Gentleman will appreciate that building society figures show that the number of first-time purchasers has increased, comparing 1970 with 1972, that the number of borrowers under 25 years of age has substantially increased, and that the number of borrowers with incomes up to average industrial manual workers' earnings has also risen substantially over two years.

Mr. Grylls

Does my hon. Friend agree, putting the matter in perspective, that one must accept that average industrial earnings have risen by nearly 50 per cent. in this period?

Mr. Eyre

There was a substantial rise in average earnings over the period mentioned. The rise in incomes has increased the capacity of people to compete in the housing market.

Mr. Ashton

Is the hon. Gentleman aware that I have just been to the Library and ascertained that over that period the increase in average earnings was 34 per cent., whereas the average payment that he is announcing is about 51 per cent. or 52 per cent.? How can we bridge that gap when we have a wage freeze and when house prices are still rising?

Mr. Eyre

The hon. Gentleman is right about there being a problem for young married first-time purchasers. One way that this problem can be met is for local authorities to encourage building schemes for direct sale. We are encouraging local authorities to develop low-cost housing schemes of that kind.

Mr. Arthur Jones

Is my hon. Friend in a position to state that more or less unlimited funds will be available for local authorities to grant mortgages?

Mr. Eyre

Compared with the Labour Government, we have provided greatly increased funds to local authorities for mortgages, and these have been very helpful to special categories of borrowers in particularly difficult situations.

Mr. Fernyhough

As the hon. Gentleman wishes local authorities to help the homeless and young couples, is he now prepared to withdraw the circular that he sent out, which prevents local authority direct-labour schemes competing? Is he aware that in Hebburn there is a fine example of that local authority's direct-labour scheme building for sale, in that the prices were so much cheaper than private contractors could offer that the district valuer asked the authority to increase them beyond what it wanted to charge?

Mr. Eyre

There is no question of that circular being withdrawn. There is plenty of scope for direct-labour organisations to get on with other work. This type of work is particularly suitable for the kind of competitive contracting that we require.

Mr. Wainwright

On a point of order, Mr. Speaker. In view of the unsatisfactory nature of that reply, I beg to give notice that I shall raise the matter on the Adjournment as soon as possible.