HC Deb 15 November 1976 vol 919 cc910-1
8. Mr. Peter Bottomley

asked the Secretary of State for Prices and Consumer Protection to what extent average family expenditure has increased as a result of the increase of interest rates and mortgage rates in the last six months.

Mr. Maclennan

Despite the increase in minimum lending rate since May, mortgage and hire purchase interest rates have held generally steady. Over the past six months, therefore, interest rates have had no significant impact on family expenditure.

Mr. Bottomley

I thank the Minister for that reply. I now draw his attention to the next six months and ask him if he will tell the House whether the increase of interest rates, mortgage rates and rents are part of the social contract as promised by the Labour Party in November 1970, or whether Socialist planning does not include the real world.

Mr. Maclennan

It is obviously too early to assess the effect on family expenditure of the recent increase in mortgage rates, but the steadying of house prices over the last two years has reduced significantly the rate of increase in net monthly payments. Conservative Members would do well to recall the comparison with the period when they were in office, between the first quarter of 1972 and the fourth quarter of 1973, when net monthly repayments more than doubled.

Mr. Whitehead

Will my hon. Friend accept that the greatest protection for the householder in this period has been the end of random land speculation that went on under the last Government, and that this has enabled house prices to be stabilised? Will he, nevertheless, bear in mind that, as there will be an additional burden on mortgage repayments in the coming months, we ought to look again at the question of a stabilisation fund for the mortgage companies, which we discussed in very great detail at the time of the last election?

Mr. Maclennan

The latter point is for my right hon. Friend the Secretary of State for the Environment. However, it is true that the latest available figures show that the deceleration in the rate of house prices, which started when the Government took office, has continued, and this is encouraging.

Mr. McCrindle

Looking at the other side of the mortgage coin, does the Minister agree that if investors in building societies were to receive a return on their money equivalent to the fall in the value of money, the mortgage rate to borrowers would have to be considerably higher than it is? Is any sort of consumer protection being considered for investors in building societies?

Mr. Maclennan

I shall consider that question very carefully.