§ 14. Mr. Clinton Davis
asked the Secretary of State for the Environment if he has had any further discussions with representatives of the building societies concerning mortgage interest rates; and if he will make a statement.
§ Mr. Davis
Is the Minister aware that there is a crisis situation on mortgages? A number of building societies have already increased their lending rates to 10 per cent. Will he give an assurance that if any much-needed help is given to the building societies or to borrowers by the Government in the course of the next few days it will be matched by comparable help to council tenants who have already been suffering from the effects of the Housing Finance Act?
§ Mr. Eyre
Discussions with the representatives of the Building Societies Association are still proceeding. When the hon. Member mentions the Housing Finance Act he should remember the high percentage of take-up of rebates and allowances which has developed and the great benefit this is giving to a large number of low-income families.
§ Mr. Selwyn Gummer
Does my hon. Friend agree that the situation on mortgages in areas like my constituency is extremely serious, and is made the more serious by the policy adopted by my local authority, which is to refuse planning permission to any private development in order to deprive people of the right to buy their own homes?
§ Dr. Dickson Mabon
Has the Minister noticed that Sir Stanley Morton, President of the Building Societies Association, said that whatever the Government might propose it is likely that interest rates will go up? Do the Government see that as any reason for being discouraged from making new proposals?
§ Mr. Biffen
When the Chancellor announced a public sector borrowing requirement in excess of £4,400 million in the current year, was it the view of the Department of the Environment that this would have the impact upon building society rates which is now taking place?
§ Mr. Edwin Wainwright
In addition to considering the interest rates of building societies' will the Minister also consider the position of finance companies, and what they are doing to people who, unfortunately, are unable to get a mortgage from a building society? In one instance a loan of £1,300 was sought and the building society said the interest charges would be £680 over 10 years. The finance company said that the interest charges for a similar loan would be £1,800 over 10 years. When will the Government do something to stop these sharks from fleecing the public?
§ Mr. Bruce-Gardyne
In the Government's discussions with the building societies will they bear in mind that 20 per cent. of the depositors with building societies have no income tax liability, and the 6.3 per cent. rate being offered 17 to them at the moment represents a public fraud, given the rates of interest which are available on the Government's own stocks? In the light of this will my hon. Friend assure the House that nothing will be done by the Government to prevent a proper rate of return being offered to depositors with the building societies?
§ Mr. Eyre
My hon. Friend left out of account certain considerable advantages which accrue to depositors in building societies—for example, rights of withdrawal, convenience of deposit, security, and similar matters. However, I shall certainly report his other words to my right hon. and learned Friend.
Mr. Bob Brown
May I declare my interest in this matter as one who has already been clobbered by interest rates and who will be clobbered again, no doubt? Does the Minister realise the seriousness of the situation? A newly married couple will simply not have the opportunity of purchasing their first home if things continue as they are.
§ Mr. Eyre
Although one or two individual societies have said that they will increase their mortgage lending rates above 8.5 per cent., the Council of the Building Societies Association has not made any recommendation, and we shall have to wait and see what happens on 4th April. I have noted the anxieties expressed by the hon. Member.
Mr. Edward Taylor
Will my hon. Friend make it clear that if a proposal is put forward which might have the effect of relieving people from what appears to be an all-time record in interest rates the Government will not turn their minds against it, and that they have not closed their minds to the problem? Will he make it clear that the Government have open minds on the proposals which might come out of the meeting?
§ Mr. Shore
Will the Minister consider what can be done in direct approaches to the Building Societies Association, and will he take account of what my right hon. Friend the Member for Deptford (Mr. John Silkin), who normally speaks on 18 these matters, said over the weekend? Will he also put it to the Chancellor that it is the Chancellor's direct responsibility, because it is as a result of his Budget that building societies are having to compete at the high levels of interest which they now face for money which the Government are trying to borrow because of the vast Budget deficit?