§ 2. Mr. Ashton
asked the Chancellor of the Exchequer what recent discussions he has had with the building societies about the level of mortgage interest rates.
§ The Chancellor of the Exchequer (Mr. Denis Healey)
The Building Societies Association made clear on 10th November that its decision to increase the recommended rate of interest on mortgages was taken in the light of the rise in the general level of market interest rates, which was emphasised by the decision to set MLR at 12½ per cent. from midday on Thursday, 9th November. The Government were notified before the announcement, but no discussions then took place.
§ Mr. Ashton
Is my right hon. Friend aware that 30 years ago the Attlee Government took powers to take rents out of the market economy and to control landlords? Why do not this Government do the same for owner-occupiers with mortgages and control the building societies?
§ Mr. Healey
I understand my hon. Friend's concern about the increase in mortgage rates, but if the building societies had not raised their rates they would not have been able to attract the necessary funds to sustain mortgage lending. We all would wish them to be able to do this.
I note the anxiety that exists within the Labour Party for the mortgagors, but what is preventing the Chancellor from overcoming the problem by altering the rate of tax payable by the building societies? Is it not correct that after each Budget the composite rate of tax for the coming year is decided? Why cannot this be done when the mortgage rate goes up by 2 per cent?
§ Mr. Healey
That would amount to another subsidy on housing. My understanding is that the Conservative Party is in favour of phasing out all housing subsidies.
§ Mr. Stoddart
Will my right hon. Friend prevail upon the building societies to reduce the mortgage lending rate with the same speed and alacrity following a reduction in MLR as that with which they put it up following an increase in MLR?
§ Mr. Tapsell
Is it not a fact that the rise in interest rates and mortgage rates is the inevitable consequence of the excessive public sector borrowing requirement in the last Budget of which we warned the Chancellor both at the time and prior to that Budget?