asked the Minister for Local Government the progress he has made in discussions with building societies towards securing a reduction in the rate of interest on mortgages.
Ceisteanna—Questions. Oral Answers. - Mortgage Interest Rates.
67.
The interest rate charged by building societies on mortgages is determined by the rate which they must pay to investors to attract and retain funds. The present investment rate of 8 per cent tax paid would normally require a mortgage rate of 12½ per cent but the special subsidy introduced by the Government in May, 1973, enables the societies to keep the maximum rate charged on home loans at 11¼ per cent. I am glad to say that, subject to review, the Government have decided to continue the subsidy for a further period of six months from the 13th March. In the meantime, I will be keeping the matter under constant review in conjunction with the societies.
Will the Minister state if the Government have any proposals to restructure the building societies and to remove them from the competition of outside financial interests in relation to borrowing from their funds?
As the Deputy is aware, legislation is being prepared to up-date the law in relation to building societies. This will not have the immediate effect of dealing with the matter Deputy Timmons has in mind. So far as competition from outside financial houses is concerned, the Government are subsidising the building societies to the tune of 1 per cent in order to allow them to have some protection against other financial bodies.