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Wednesday, 3 June 1970

Mr Whitlam asked the Treasurer, upon notice:

(1)   What would it cost to subsidise institutional lenders to reduce interest on housing loans to the rate they charged before the Menzies Government took office in 1949.

(2)   What would it cost to subsidise them so as to reduce interest for the first (a) 5, (b) 10, and (c) 15 years of marriage.

Mr Bury - The answer to the honourable member's question is as follows:

There is insufficient information available for meaningful answers to be given to these questions. Any estimates that could be made would. necessarily be subject to a wide margin of error.

(1)   The table below shows the estimated value of home loans outstanding in March 1970 of the major institutional lenders for housing, together with the predominant rales of interest charged by these institutions on new loans granted in 1949 and 1970.


In order to calculate the cost of subsidising these lenders to reduce interest on housing loans to the rates ruling in 1949, the following information, however, would also be required:

(a)   the average repayment period for ;h: loans outstanding to each type of institution;

(b)   the rate of reduction in the interest component of the loan repayments; in credit foncier type loans the interest component bulks large in the early repayment periods but diminishes considerably as the end of the repayment term nears;

(c)   the interest rates being charged on existing loans; while some lenders adjust their rates on existing loans whenever rates on new loans change, others are able to adjust rates on existing loans only infrequently;

(d)   the average rest period for the calculation of interest on outstanding balances for each type of lending institution.

(2)   There is also insufficient information available to allow meaningful calculations to be made of the amounts required to subsidise institutional lenders to reduce interest to the rates charged in 1949 for the first (a) 5, (b) 10, and (c) 15 years of marriage. In order to make such estimates it would also be necessary to have the following additional information:

(a)   the proportion of housing loans going specifically to married couples from each type of institution; and

(b)   the proportion of couples who obtain a housing loan from each type of institution before marriage, on marriage and at various periods after marriage.

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