Why your mortgage has been put up—by Tory MP
Small increases in interest rates no longer provide the old results, Mrs. Margaret Thatcher, Conservative MP for Finchley and Shadow Minister of Transport, told a luncheon meeting at the Hendon Hall Hotel last week.
Mrs. Thatcher, who was addressing staff and guests of the Cheltenham and Gloucester Building Society, said: “I am sure there is a good deal of money which could come into savings of only we could get it. I think it is right to provide a wide range of saving facilities, and you will find that people will wish to make use of more than one.
“Obviously the first claim is to purchase one's own house. This is possibly the greatest single security.”
Two other fields of savings she said should enable a person to have a liquid reserve of assets and investment in unit trusts or stocks and shares.
New and greater wealth is not to come from increased labour but from increased use of machines, ingenuity and innovation.
“That means that everyone is to have a share in the machines and innovation. They have got to have a share in the industry which will be responsible for increases in investment.”
She pointed out that the building societies such as the Cheltenham and Gloucester provided two types of savings—house purchase and investment for withdrawal.
“Small increases in taxation do not produce the results, so we have taken enormous increases in recent years. The way in which we are going does lead to inflation.
“Inflation is about the most difficult and the most important problem that we have to tackle.
“As far as savings are concerned, an interest rate has not only to provide an income. It has to make up for the loss in value in the investment that has been incurred.”
Mr. Bernard P. Ward, President and Chairman of the company said in welcoming Mrs. Thatcher: “Building societies do not seek or welcome high interest rates, as they inevitably exclude would-be house purchasers and add to the difficulties of some who have already embarked on house purchase.
“Naturally, when a higher rate is paid to investors, borrowers must foot the bill. In the judgment of my board it is not prudent to make use of the society's reserves as a temporary expedient because a weakened financial structure would quickly undermine the confidence of investors.
“The new rate of 8½ per cent to borrowing members is historically, high, but when after tax relief the net rate is expressed as 5½ per cent it is perhaps seen in truer perspective as still the cheapest way to borrow money.
“A house purchaser, however hard he may find it to believe, is in fact a privileged person if he is buying a house through a building society.”
Representatives of banking, accounting, legal and real estate professions were among the 80 guests attending the function to mark the opening of the new Finchley branch of the society. Also present was Mr. R. C. Stow, the company's general manager. and Mr. P. M. Brigden. manager of the Finchley branch.