HC Deb 05 July 1979 vol 969 cc680-1W
Mr. Walter Johnson

asked the Chancellor of the Exchequer what recent discussions he has had with the Building Societies Association concerning the proposed increase in mortgage interest rates; and if he will make a statement.

Mr. Lawson

Treasury Ministers and officials have regular contacts with building society representatives.

Mr. Walter Johnson

asked the Chancellor of the Exchequer if he will make a statement on the consequences for the retail price index and the economy generally of an increase in the mortgage interest rate of 1 per cent., 1¼ per cent., and 1½ per cent., respectively.

Mr. Biffen

The direct effect of increases in mortgage interest rates of the sizes stated would be to add about ¼ per cent.,⅓per cent. and 2/5 per cent. respectively to the RPI.

It is not possible to provide estimates of the effects on the economy generally. Such estimates could, in any case, only be made using assumptions about the other economic circumstances in which the mortgage rate changes occurred: and they would inevitably be subject to a wide margin of error.