§ 1. Mr. McCrindle
asked the Secretary of State for the Environment if he plans to have early discussions with the Building Societies Association.
§ The Secretary of State for the Environment (Mr. Peter Shore)
My Department is in regular contact with the Building Societies Association, and I am myself always ready to meet it whenever the need arises.
§ Mr. McCrindle
Does the Secretary of State agree that 1977 will be a very difficult year for anyone seeking a mortgage? Does he further agree that that is largely because of the Government's general policy on interest rates and the fact that they have been leaning on the building societies to keep their borrowing rates below those of other competitive forms of saving? Can he give any hope of a change in policy? Indeed, can he give any hope to young people seeking to buy a house for the first time in 1977?
§ Mr. Shore
I am sure that 1977 will be a difficult year in terms of mortgage money. What we are all concerned and uncertain about is how difficult it will be. When Questions were addressed to me a month ago about building society interest rates and interest rates generally, the feeling was more pessimistic than it is today. Without further evidence, I should not wish to draw any conclusions about the course of interest rates in the months ahead. I must emphasise that it is for the building societies to judge their requirements against the many different purposes that they seek to serve.
§ Mr. Frank Allaun
Did the Secretary of State check the figure mentioned last month—that only 6 per cent. of mortgages were going towards the purchase of houses costing less than £6,000? As the poorer half of the community cannot obtain mortgages, what proposals will he make to the building societies? Why not get them to lend 10 per cent. of their funds at their normal rates of lending to local authorities so that they in turn can make loans available, particularly as in the last two years councils have had three cuts in the amounts that they can lend?
§ Mr. Shore
I am aware of my hon. Friend's concern about this matter. We have had a number of exchanges on it. I am in close touch with the building societies on the general question of replacement lending for the cuts in local authority mortgage lending that we have had to impose. Within that general effort, we shall be directing particular attention to the problems that my hon. Friend has often raised of red-lining and blue-zoning.
§ Mr. George Rodgers
Does my right hon. Friend agree that in recent months the flow of funds into the building societies has increased considerably? In fact, the Chairman of the Nationwide Building Society commented on that matter within recent hours. In those circumstances, would it not be appropriate for the building societies to be pressed to make greater funds available through local authorities for the purchase of low-cost property, which is at present deteriorating and which will no longer be available on the market unless funds are made available?
§ Mr. Shore
I am not sure that I can confirm my hon. Friend's comment about the general state of the building societies' reserves. Taking the building societies as a whole, my impression was that 301 liquidity had been under some pressure, reflecting the falling inflow of the last two months. There may be special reasons involved in that.
As regards pressing and talking to the building societies about making funds available to replace local authority lending, that is very much in my mind and in the minds of the building societies. Indeed, we are discussing these matters.
§ Mr. Gray
When the Secretary of State next meets the Building Societies Association, will he express the concern felt in many rural areas that building societies are prepared to accept investment from but not necessarily to give assistance to borrowers in those areas? Will he suggest that it would be in the interests of the prestige of the building societies to make abundantly clear to potential investors the areas where they are not prepared to give assistance?
§ Mr. Speaker
Order. Before we continue, I ask right hon. and hon. Members to do me the great favour of trying to make both supplementary questions and answers shorter.