asked the Minister for the Environment if he will introduce emergency measures by statute or order to prohibit any increase in building society mortgage rates for a period of two months.
Private Notice Questions. - Mortgage Rates.
As recently as yesterday afternoon, I had meetings with representatives of the Irish Building Societies Association, and of the Norwich Irish and Irish Life Building Societies to discuss the question of their investment and mortgage rates and other aspects of their finances. I was informed of developments since the meetings held in March-April last on these general issues. I informed the representatives that I would report on the situation to the Government and would meet them again on Thursday, 22 July 1982.
I intend to submit a full report to the Government on the situation. Pending consideration of this report and the discussion at the forthcoming meeting with the societies, it would be premature to accept the Deputy's proposal.
Would the Minister agree that it would be untenable for any further substantial increase as is proposed here by the building societies, up to virtually 18 per cent interest, to be permitted and that if it was permitted it would have the effect of literally rendering very many people, young couples in particular, homeless as a result of their inability to meet increased mortgage repayments?
I wish to remind the Deputy that when the threat of an increase arose in March last, I initiated discussions with the societies and succeeded in reaching agreement with them. It was well publicised that there would be no increase until August for new mortgages and 1 September for existing mortgages. The Deputy's concern would be more credible if he had not been a member of a party supporting the Government when between July and October last year they withdrew the subsidy and allowed building society mortgage rates to increase from 13.15 per cent to 16.25 per cent, a rise of 3.1 per cent. I share the Deputy's concern about further increases and, as I said, I will be reporting to the Government and having a further meeting with the building societies on Thursday of next week.
We are not talking about an increase to 16.25 per cent, we are talking about a threat by the building societies to increase it to 17.95 per cent. Does the Minister not agree that that would be untenable, particularly in the context of falling interest rates at present, and will he assure the House that he will take all necessary steps, by legislation if necessary, to ensure that there is no increase beyond the figure of 16.25 per cent so that people's homes can be protected?
As I have already said, I had a meeting yesterday with the societies. I intend to make a full report to the Government on the basis of those discussions and I will then be meeting the societies again next week. There is no statutory control over interest rates structures of the building societies, just as there is not statutory control over the interest rates structures of the associated banks. Successive Governments have decided that statutory control of the societies' interest rates would not be prudent.
Would the Minister not agree that it is past time when an investigation should be carried out into the operations of the building societies and, in particular, the large number of branch offices which various building societies open up beside each other in various towns and cities? They accumulate large reserves which they do not apparently touch in order to cushion themselves against the movement of rates.
The whole operation of societies came up at discussions in March and April last and again yesterday. There are regular discussions on them. As far as the day-to-day operation of societies is concerned, there is a registrar and it is his responsibility to monitor the societies and to prevent any abuses of the system.
(Cavan-Monaghan): Was the Minister's attention drawn to the statement of the chairman of Allied Irish Banks recently to the effect that interest rates will rise and continue to rise because of Government over-borrowing and general mismanagement of the economy? In view of that, is it a fact that the building societies have given notice to the Minister that they propose to increase interest rates by 1.7 per cent and that that will reach an all-time high and will also affect employment in the building industry? Having regard to the fact that unemployment has now reached 150,000, an all-time record, have the Government any plans to deal with interest rates and with unemployment?
Meetings between the building societies and myself are confidential. I will be making a report to the Government on the meetings I had yesterday. Deputy Taylor's concern was bad enough, coming from a backbencher, but coming from a member of the former Government who withdrew the subsidy and allowed interest rates to rise without making any effort to stop them——
(Interruptions.)
This is the price we are paying for the 1977 manifesto.
A final supplementary from Deputy Barry Desmond.
In view of the fact that the Minister has quoted twice in his replies the increases permitted last year, is it unlikely that at this stage the Government will be able to offer any assistance on this occasion in relation to these increases? If this is so, is it the view of the Minister that there should be some positive discrimination in terms of assistance towards some groups of mortgage holders especially first-time holders of large mortgages? Is that the general trend of what we can interpret from what the Minister said this afternoon?
The Deputy cannot assume that. As I said, I will be making a full report to the Cabinet on the basis of discussions held yesterday. I will be meeting the societies again next week. I meet the societies and then report to the Government. This has been the procedure in my period in the Department of the Environment, unlike my predecessor, who did not bother meeting them at all.
(Interruptions.)