Below is the text of Mr Major’s response on mortgage interest made on 15th March 1990 in the House of Commons.
Mrs. Wise To ask the Chancellor of the Exchequer what was the total amount of mortgage interest paid by owner-occupiers for 1988; and what is the comparable amount in 1989.
Mr. Major The total of interest payments depends both on interest rates and the amount of mortgages outstanding. Of the growth from £22.1 billion in 1988 to £32.4 billion in 1989 nearly half was due to the increase in the stock of mortgages.
Mrs. Wise Does the Chancellor of the Exchequer accept that the squeeze on home owners has put more than 400,000 of them into some form of arrears, and that the position of many of them and of the poorest will be worsened when the poll tax comes in? What does he intend to do to relieve that burden of debt?
Mr. Major As the hon. Lady will know, the vast majority of borrowers are still keeping up with their mortgage payments, and I expect that to continue to be the case. Borrowers in serious difficulties account for less than 1 per cent. of the total number of borrowers.
Mr. Oppenheim Bearing in mind the fact that for years and years the Opposition steadfastly opposed the sale of council houses, that even now Labour councils put obstacles in the way of people who want to buy their council houses and that under this Government there has been a record rise in home ownership, does not concern for the plight of the home owner sound rather odd coming from the lips of Opposition Members?
Mr. Major My hon. Friend is correct in his observations, in particular that owner-occupation has risen dramatically. The demand for it continues and it will continue to rise.
Mr. Beith Does the Chancellor recognise that the only way to get interest rates down without pushing inflation up is to combine membership of the exchange rate mechanism with a tighter fiscal stance? Since the Labour party is not prepared to do that, why does not he give it a try on Tuesday?
Mr. Major I am grateful to the hon. Gentleman for his advice, but he will understand that I have no intention of responding to it now.
Mr. Conway Does my right hon. Friend think that those who now have a mortgage, who may want a different house, or those who aspire to have a mortgage, would benefit if we were to embrace the policy to freeze new mortgages advocated by the Opposition’s environment spokesman, the hon. Member for Dagenham (Mr. Gould)?
Mr. Major What is certainly true is that the Opposition’s policies would create a mortgage queue, which would help no one who wishes to become a home owner.
Mrs. Beckett Does the Chancellor realise that many home owners who are struggling not to fall into arrears will find his complacency deeply worrying? Has he taken no notice at all of the recent Policy Studies Institute report, which suggests that about 1 million people are in serious housing debt, especially as that report was published before the most recent mortgage and rent increases?
Mr. Major The hon. Lady misjudges me if she thinks that I am complacent or unconcerned about the issue, but the reality is that only a relatively small number of borrowers are in difficulty. When that occurs, I hope that they will take the advice of their lender, whether a bank or building society, and I hope that, wherever possible, that lender will enable them to meet their mortgage payments by extending the mortgage. That is frequently the position. It has been in the past and I expect that it will be so in the future. But there is no doubt whatever that a premature move to bring down interest rates would not be to the benefit of the economy, would not assist us in bringing down inflation and would not assist mortgage holders either.
Mr. Wilkinson Notwithstanding the necessity to maintain a tight monetary policy, I remind my right hon. Friend that many families in outer London face acute hardship because of great difficulty in keeping up with their mortgage payments and the rising cost of commuter fares. In his forthcoming Budget, will he ensure that he does not rely on monetary policy alone to restrain inflation? His predecessor’s obsession with monetary policy was very damaging.
Mr. Major As my hon. Friend knows, he will receive the answer to that question within a few days.
Mr. Speaker Question No. 8 Mr. Cunliffe?
Question No. 9. Mr. John P. Smith? [HON. MEMBERS: “Where are they?”]
Question No. 10. Mr. Randall?
Mr. Skinner They are all in Staffordshire.
Mr. Speaker Order. It is always a help to the Chair if hon. Members who cannot be here to ask their questions inform the Chair.