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Dáil Éireann díospóireacht -
Tuesday, 1 Jun 1965

Vol. 216 No. 1

Ceisteanna—Questions. Oral Answers. - Building Society Housing Loans.


asked the Minister for Local Government if he is in a position to make a statement arising out of his meeting with the building societies concerning the provision of loans for housing.


asked the Minister for Local Government what developments, if any, have resulted from his discussions with the building societies; and if he will make a statement on the matter.


asked the Minister for Local Government if he has now met the building societies to discuss the non-availability of loans for house purchase; if so, with what result; and when the public may expect a relaxation of credit for house purchase purposes.

With your permission, a Cheann Comhairle, I propose to take Questions Nos. 18, 19 and 20 together.

I met representatives of the principal building societies last Friday. My discussions with them covered a wide field. I asked them to supply more detailed information relating to the trend of their activities and I propose to resume the discussion when this information has been furnished. In the meantime I am not in a position to add anything to the press statement issued last Friday.

Is the Minister aware that, at present, building societies are operating two forms of restriction? They will not deal with any new applications for loans and decisions on the existing applications are being delayed and postponed. In addition, no applications will be considered for loans in respect of houses the purchase price of which exceeds £3,000.

I am not aware of all those things. What I am aware of is that new applications are not being accepted. I do not know if they are being accepted by any society but, certainly, the vast majority of building societies are not accepting any new applications at the moment. In so far as sanctioned loans are concerned, my information is that all of these are being dealt with and in a normal manner though this may occasion delay, which is not unusual in circumstances where a backlog has built up. I think there was a third question?

Yes, in relation to houses in excess of £3,000.

So far as I am aware, the £3,000 limit, if at all in operation, is in operation only by one society, although the idea of an overall limit, not necessarily £3,000, is one which may be under consideration by all the societies at the moment.

Will the Minister say is it due to lack of money that they are not considering new applications?

Would the Minister consider helping the situation in the interests of the people who are trying to buy their own houses? Would he answer that question?

The fact that I am meeting the societies and discussing the matter is the answer to the question.

Would the Minister be good enough to say, if it is a matter of money, will the Government consider depositing with the societies a sum sufficient to enable them to meet the approved requests for loans to build houses?

It is too soon, in the circumstances of my meeting these people, to have ascertained the position. If the Government were prepared or were thinking of doing any such thing as the Deputy asks, we would not even know what amount of money would be required. It is for the purpose of pursuing this and many other aspects of the situation that I am meeting them again, I expect in the not too distant future, and in the meantime information is being passed between my Department and the building societies.

Does the Minister advert to the acute dilemma of people whose loan has been approved and who now cannot get the loan and are involved in all sorts of domestic problems as a result of having made family arrangements, insurance arrangements and other arrangements following on the understanding that the building society would make the loan available? They are now told by the building societies that they have not the money and they cannot make a loan available. In the light of that situation would the Minister consider asking the Government, ad interim, at least, to make a sum of £500,000 or £1 million available to building societies to enable them to deal with the cases with which they are at present prevented from dealing on account of the shortage of money, leaving the other matters which require investigation to stand over until the Minister has had his second discussion with them?

I am not satisfied, from my information at the moment, that the position is as the Deputy has outlined and that, if such a position does exist, it arises purely from a shortage of money. There has been a practice always—I think it was a business practice established for the better working of their loan operations—that a bridging loan had to be used practically at all times from the banks to fill in the time between the offer of the loan by the society and the actual payment of that money by the building society to the applicant. I am not aware, although I have gone into this matter pretty fully up to date, that there is any real dilemma on a wide scale existing at the moment on the basis the Deputy suggests, that people whose loans were sanctioned have not been able to get them.

Can the Minister say if any of the building societies have suggested he might facilitate them by providing a bridging loan to tide them over the difficult period and at least enable them to deal with existing applications?

The bridging loan is quite a usual feature in normal circumstances. When the loan has been agreed to, it is probably much earlier than the time when the house is erected and it may be necessary to raise a loan from the bank to cover the interim period while the house is in the course of construction, during which time some money may have to be advanced to the builder who may not be in a position to complete the erection of the house and wait till he gets the full loan from the building society. That is the bridging loan to which I have referred, and not a specific one in these circumstances.

Why they do not borrow £1 million is a mystery to me.

Is it not true that the banks have refused this bridging loan?

I have not got that information. I am not denying that it may be true but I have not got the information.

Is the Minister aware we brought this to his attention and did he ask the building societies if the situation was as we outlined it?

Two things are not as they have been outlined in this House, and I want to repeat this here. First, none of our building societies is doing as was alleged here last week, investing money belonging to its depositors in more lucrative enterprises inside or outside this country. The second point is—and I have the authority of the building societies to say this here— that they have not cancelled, because of the shortage of money, any loan which they have already agreed to make to applicants. Those are two things which I can deny on behalf of the building societies through the information given to me by them on Friday last.

Did they say when they would give the loans?

Why they do not borrow £1 million is a mystery to me. It would cost nobody anything.

It would be like the farmers' loan with no interest charge.