HL Deb 27 October 1986 vol 481 cc505-6

2.50 p.m.

Lord Williams of Elvel

My Lords, I beg leave to ask the Question standing in my name on the Order Paper.

The Question was as follows: To ask Her Majesty's Government whether they have any plans to restrain building societies' and banks mortgage lending.

The Parliamentary Under-Secretary of State, Department of Transport (Lord Brabazon of Tara)

My Lords, the level of building societies' and banks' mortgage lending is primarily a matter for the commercial judgment of building societies and banks.

Lord Williams of Elvel

My Lords, I express my gratitude to the noble Lord for that limited response. But is he not aware that mortgage lending net advances from building societies and banks has moved from £8.6 billion in 1981 to £18.3 billion in 1985, while the percentage of home owners who have a mortgage has only moved from 31 per cent. to 37 per cent.? In the light of this and the consequent inflation in house prices that this must bring, does the noble Lord agree that the proper course Os action is to reduce the mortgage tax relief to the standard rate?

Lord Brabazon of Tara

My Lords, I think that our views on mortgage tax relief are well known and certainly I am not going to offer anything new this afternoon. As the noble Lord pointed out I think in his Question, house ownership is at record levels at the moment and since 1979 2¼ million more homes are owner occupied. That is a record to be proud of.

Lord Seebohm

My Lords, does the noble Lord agree that the fact that the building societies seem to feel that they have a divine right to meet any requirement whatever to lend for house purchase and the fact that now if they have no deposits they are allowed to dip into the market are major causes of the inflation in house prices? Does he also agree that the fact that they now use the money market is probably one of the causes of high interest rates?

Lord Brabazon of Tara

My Lords, the noble Lord may be right, but competition from the banks has undoubtedly been beneficial to those wishing to borrow on mortgage. The figures for increased home ownership prove that.