Vol. 265 No. 4
asked the Minister for Local Government if he is aware that the decision of the major building societies to increase mortgage interest rates is imposing a severe burden on people buying their houses; if he is satisfied that the increases were justified; and if he will make a statement on the matter.
29.
asked the Minister for Local Government the extent to which he will allow building society charges to rise.
30.
asked the Minister for Local Government if the Government are considering any proposals to nationalise building societies.
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.
I should like to hear the Minister's comments on the very serious situation which has developed in relation to the flow of funds into building societies, on the fact that many of the building societies who are members of the association are at present not even accepting applications and there is very grave concern being expressed at the non-availability of home loans to the many people, especially young couples, who are anxious to purchase homes and on the very serious situation developing in the building industry and in relation to the purchase of new homes. Unless some drastic and effective——
The Deputy tends to make a statement rather than ask a question.
Unless the Minister takes some definite and positive action to improve this situation, we seem to be heading for a major national housing crisis and——
The Deputy is making a speech.
Already, many of the major——
I must ask the Deputy to desist.
——firms who build houses are letting off workers, reducing their staff.
I shall have to call the next question.
During the time that I was in the Department——
The Deputy has abused his privilege in this matter. I am calling Question No. 31.
It would be disastrous if there were anything except a continuation of the increasing output which we in Fianna Fáil achieved.
I shall have to call Question No. 31.
I should like to get an opportunity to answer the Deputy's speech.
The Chair did his best to keep the Deputy in order.
There are jobs and homes at stake.
First of all, the building societies have recently been in consultation with the Department, with my colleague the Minister for Finance and myself, and all of them, with the exception of one society, who since have agreed, are prepared to accept that it is all right, that 10 per cent is a reasonable rate to which to have interest rates tied. What I should like to know is, is Deputy Molloy suggesting that interest rates on loans should be increased beyond 10 per cent?
I should like to repeat the question that the Minister did not answer. I asked him to give me some statement on the present position where major building societies are not even accepting applications and what he is going to do about it.
I should like to say, with your permission, Sir, that the matter is receiving urgent attention and that Deputy Molloy's statement here does not bear out what the building societies say to us. Therefore, I feel it is not necessary to go into further detail.
Which part of his statement?
Ask the borrowers. They are the ones who know.
Might I ask the Minister, in view of the non-availability of home loans, if he would consider instituting some inquiry into the investment portfolios of certain building societies with special reference to the possible investment abroad of their liquid resources? Would the Minister consider that point in any future analysis of or discussion with the building societies?
There is an investigation being carried out into building societies but I should like it to be stated definitely here that a disservice is being done to the country by those who would give the impression that all building societies, or that building societies generally, are not trustworthy organisations. Building societies generally are doing a good job and should receive full support. I should like also to say that the money invested in building societies is secure and there is no danger whatever that there will be any question of people losing money which they have invested in building societies.
I am sure the Minister is aware of the serious threat to employment in the private housing sector at present as a result of the non-availability of home purchase loans. Would the Minister assure the House that he is taking urgent steps to provide money for private house building in view of the threatened unemployment?
I hate to be contentious about this matter because it affects the whole country. It is true that this crisis started in the last quarter of 1972 and in 1973.
That is not true.
This Government are attempting to do something about it. The previous Government did nothing about it. That is why it is in the position that it is in now.
I am not asking the Minister who is responsible. All I am asking is for an assurance that he is taking urgent and positive steps to save jobs that may be lost as a result of this situation.
Deputy Fitzgerald can be assured that urgent and positive steps are being taken to deal with the matter.
What are they?
Could the Minister say if the Government are still considering further tax concessions to the building societies?
I am not prepared to discuss in this House publicly matters which are being discussed with the building societies. It would not be in the interest of the societies or of the building industry generally.
Could the Minister say——
I am calling Question No. 31. I deem that this matter has been ventilated sufficiently.
This is a very serious matter——
I appreciate that but I feel the matter has now been ventilated sufficiently.
In view of the unsatisfactory nature of the reply, I should like to give notice of my intention to raise the matter on the Adjournment.
The Chair will communicate with the Deputy.
31.
asked the Minister for Local Government if he will state, in view of the fact that building societies are not making loans available for the construction of houses, his plans to enable people whose income exceeds £1,800 to obtain a house building loan.
The income and loan limits, which were introduced last July for local authorities' house-loans schemes, are amongst the aspects of housing which I am examining in consultation with my colleagues in the Government and meanwhile, I am keeping the situation in relation to the availability of house purchase loans from building societies under close review. I would however, like to point out that in 1972 the societies advanced £41 million for house purchase and allocated loans to a total value of £67 million. At the end of that year, they had unpaid applications on hands amounting to about £41 million. Unpaid applications with assurance companies and local authorities at the same date amounted to a further £25 million. On the basis of these figures, it is reasonable to expect that total expenditure on house purchase loans in 1973-74 should exceed the expenditure of about £60 million on such loans in 1972-73.
Would the Minister consider increasing the limit of £1,800 to something more realistic?
I agree with Deputy Nolan's suggestion that the £1,800 limit has caused difficulties and, as I stated in my reply, the matter is under consideration.
Would the Minister not agree that the greatest service he could do to people anxious to provide homes for themselves would be to increase the income ceiling to £2,200? Seeing the Minister has already regretted that an alleged lack of planning is holding up the very laudable desire to provide houses—and this is something he cannot overcome in a year—would he not agree that if he brought in such a provision now it would enable him to allow people to build their own houses and that they would overcome this difficulty in a year if he increased the income limit to £2,200 and let those who are anxious to provide their own houses but are debarred from doing so by the present regulations go ahead and do so?
Make it £2,500 and Deputies will qualify.
If the two Deputies get together and decide on a figure, I might consider it.
