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Mortgage Interest Rate

Volume 977: debated on Monday 28 January 1980

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asked the Secretary of State for the Environment how many home owners have notified the Government either directly or through their building society of their intention to transfer to an option mortgage following the announcement by the Building Societies Association of the increase in the mortgage interest rate from 1 January, and if he is able to publish an estimate of the likely cost to the Exchequer of funding the tax relief to the building societies movement.

No information is collected by my Department about transfers to or from option mortgages. I would not expect changes in interest rates, of themselves, to lead to an increase in transfers because the option mortgage subsidy is set to be broadly equivalent to basic rate tax relief on mortgage interest within a range of interest rates. The cost of option mortgage subsidy is estimated at about £180 million in 1979–80.