§ Mr. Chris Smith
To ask the Chancellor of the Exchequer what is the cost to the Exchequer of(a) a 1 per cent. increase in mortgage lending rates, (b) the cumulative cost since mortgage rates began to rise in June 1988 up to the end of 1989–90 and (c) the estimated cost for 1990–91.
§ Mr. Lilley
An increase of 1 percentage point in the current level of mortgage interest rates would increase the annual cost of mortgage interest relief by about £550 million. The estimated additional cost of mortgage interest relief, resulting from the increases in mortgage interest rates above their 10 per cent. level of June 1988, will be £2.4 billion by the end of 1989–90. This cost will to a large extent be offset by an increase in the tax yield on interest from deposits. The cost of relief in 1990–91 will depend on the levels of borrowing and interest rates.