Mr Major’s Parliamentary Answer on Mortgage Arrears – 15 February 1990

Below is the text of Mr Major’s response on mortgage arrears made on 15th February 1990 in the House of Commons.

Mr. Harry Barnes To ask the Chancellor of the Exchequer what is his latest estimate of the number of home-owners with mortgage arrears.

Mr. Major Around 70,000 mortgages are more than six months in arrears, less than half of 1 per cent. of total home-owners.

Mr. Barnes I am sure that all hon. Members are meeting more and more constituents whose debts have reached crisis point. Many have become homeless, and the position has been worsened by the increase in mortgage rates. The plight of those people is desperate: they also face increases in transport and heating costs, and the poll tax, which is yet to be imposed in England and Wales. Are not we moving from crisis to catastrophe, and should not those who reside at No. 10 and No. 11 Downing Street be evicted, rather than our constituents?

Mr. Major I share the hon. Gentleman’s concern for those who are in difficulties. However, the level of arrears, although a little higher than it was a while ago, is still very low. A vast number of repossessions are predominantly the result of marriage break-up rather than high interest rates.

Mr. Tim Smith Will my right hon. Friend confirm that the figures that he just gave for mortgage arrears account for 0.73 of 1 per cent. of all mortgage holders, and that that proportion is lower than it was at the end of 1985? If that number is in arrears, by definition 99.27 per cent. of people are not.

Mr. Major I confirm those figures. Of course arrears are difficult and painful for every individual home owner, but it is equally true that they are not running at the critical level implied by the hon. Member for Derbyshire, North-East (Mr. Barnes) in his supplementary question.

Mr. Benn Is the Chancellor aware that – quite apart from the tragedy of repossession – many people who had thought that they were home owners have discovered that they are home buyers? There is a big difference between the two. The Government have no interest in home buyers; they try to persuade home buyers that they are home owners, which they are now discovering that they are not.

Mr. Major The right hon. Gentleman is clearly unaware that the number of properties repossessed in 1989 – which, I think, underlies his concern – was less than one fifth of 1 per cent. of the number of building society loans. The problem has been there for a long time, and it certainly existed when the right hon. Gentleman was a Minister.

Mr. Dunn Is my right hon. Friend aware that more than 2 million more families now own their homes than in 1979? Is not there a strong case for raising the mortgage tax relief threshold from £30,000 to at least £60,000 – [Interruption].

Mr. Speaker Order. The hon. Gentleman has an absolute right to say what he wants to say.

Mr. Dunn – to take account of the huge increase in the value of homes, especially in the south-east, and in north-west Kent in particular?

Mr. Major I note my hon. Friend’s representations on that matter. He should bear it in mind that owner-occupation has risen from 55 to 65 per cent. in the past decade and that there is still a substantial demand for home ownership to continue, as I believe and expect it will.

Mr. John Smith Does the Chancellor recollect that in the Conservative party’s 1979 manifesto the then level of interest rates and mortgage repayments were said to result from what was called “Government financial mismanagement”? After 11 years of Conservative Government, with people are suffering the highest mortgage repayments in our history, is that still true? Is it caused by Government financial mismanagement and, if not, what is the reason for all this misery?

Mr. Major What was said in 1979 was entirely correct – [Interruption] – because for a long time when the Labour party was in Government there were negative interest rates which robbed savers, pushed up inflation and wrecked the economy.

Mrs. Currie Does my right hon. Friend agree that the building societies, which have been lending young people three and four times their income to buy overvalued properties, must take some of the blame? Does he also accept that what is worrying people in my constituency is not just the mortgage rate but a combination of the mortgage rate and the potentially astronomical community charge? Will he take cognisance of that and invite my right hon. Friend the Secretary of State for the Environment to cap Derbyshire county council?

Mr. Major I shall certainly pass on my hon. Friend’s latter remark to the Secretary of State. I agree that people should be prudent in the borrowing that they take on.