With your permission, a Cheann Comhairle, I propose to take Questions Nos. 28, 29 and 30 together.
I fully appreciate the problems that increases in mortgage interest rates involve for borrowers from building societies. However, since the societies borrow on a short-term basis and lend, generally, for periods of 20 to 25 years, they have no option but to offer to investors rates of interest which, at any time, can be expected to compete successfully for an intake of funds with banks and other commercial agencies. Where the rate of interest paid by the societies to investors rises, an increase in their mortgage rates can hardly be avoided. The consequences for the societies, for their borrowers, for the housing programme and for employment in the building industry would be extremely grave if the interest rates payable by and to them were not allowed to move with general trends in the money market. I should point out in this connection that the societies are now the principal source of private housing finance and that their contribution in this respect is crucial to the housing programme. In 1972, for example, they advanced a total of £41 million for house purchase and approved loans for about 7,700 new and 4,500 other houses.
The Government are determined, however, to take all available measures to prevent unjustifiable increases in mortgage rates and recently authorised me to inform building societies that the special taxation arrangements which are operated administratively by the Revenue Commissioners in relation to them will henceforth be available only to societies which charge a rate of interest on house-purchase loans that does not exceed the rate which I may specify from time to time. The societies were informed on the 23rd March that, in the existing circumstances, the maximum rate specified for this purpose was 10 per cent.
The Government are not considering any proposals to nationalise building societies.