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Summary of remarks made by the Hon Dam Annabelle Rankin, Commonwealth Minister for Housing, to the Queensland Federation of Housing and Building Societies, Hayman islands 6 June, 1970



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378 8 p. in. Saturday, 6 June 1970

SU ARY 02 R rUADE t> ;•, H ,

9 RANKIN COh10NVEALT I, I I1?ISTI FOR HOUSING, TO TiJE (T f l; T 1 TTy FEDERATION ^j^` S 7(7 AND BUILDING . E SLY OF O 11V a S L I A-l" D 1J T L. 1 G

SOCIETIES, MA .lAN ISLAND 6 JUNE, 1970

In opening the Conference, Dame Annabelle said it is generally

accepted by the home building industry that a measure of financial

restraint is necessary to slow down the recently accelerating rate

of increase in the cost of a '7.ome. Most costs and prices have been rising far too rapidly, and home building costs and prices have

,.^ unfortunately been suffering from this malady. The major remedies are a tigtening in the supply of money and a rise in its cost.

However, there will be a significant easing in the money

supply position in the September quarter as the Commonwealth moves into its customary seasonal deficit position, and as ersonal income

tax refund cheques amounting to more than ;30C million are posted to thousands of taxpayers.

While interest rates remain at relatively high levels,

home-seekers and those who have borrowed to build their homes will

have to p ay more in interest. However, those who are repaying loans to a permanent building society obtained their loans at the lo west

possible rate available in the market at the time they entered into

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their contracts. By borrowing short, the building societies obtain money from the market at the cheapest possible rate, and the benefits

of this are passed on to the home-seeker when he obtains his housing

loan.

But what happens when :_coney b ecomes dearer ? The permanents,

and also ban ks and other lending institutions, must offer a higher

return on funds deposited with them. As this higher return is payable

on both existing and new deaosits, it can only be p aid if there is an

increase in the interest charge on both new and existing 'Loans.

Howeve r , interest rates move down= as well as up. . When the

permanent societies are able to obtain the funds they need by offering

a lower return, this benefit will be passed on to borrowers by a

reduction in the interest charge on their outstanding loans.

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The building; societies

to the c ?est or_ of an increase

be congratulated for this. it consideration of the interests decid3d to increase interest c:

adopted a most resp onsible approach in thei r interest rates, and are to was only after very careful of borro ers and investors that they aarges.

Due largely to this tightening in finance, the number of housing loans approved by permanent building societies has declined. I am aware of the efforts that these societies have been making,

and are making, to increase the number of housing loans t h ey approve.

The Government is obtaining up to date information the 1 of th nu mber of housing loans being cp_.;roved and of the number being co-,;L ,1e nced, and likely to be commenced, by a numbG.'- of builders. Changes in the

rates of lending for housing and in home building activity are being continuously reviewed by the Government in a responsible manner.

^p The Government does not welcome the necessity to impose measures of restraint, but we are not prepared to stand idly by.

We expect the measures of restraint we have taken to prevent the cost of a house and land rising at a^i accele rating =ate. A tightening of

the supply of money impcses so .e financial discomforts, but in the

longer term this will meal that houses, and many other goods and services, will be chea p er than they would otherwise have been. Moderate restraint now will produce very real cost benefits to the community, including home-seekers.

There is no hiding the fact - the official statistics will soon show it - that the temporary decline in the num^er of new housing loans being approved by the permanent building societies, due to the C tighter monetary situating developing at the time of the customary

slow-down, is having a significant effect on the rate of new dwelling commencements. It is also true that this effect will be greatest in

those States where the permanents have been most successful in competing with other lenders for hqusi ng purposes, but have subsequently had to

curtail their lending. In this situation it is in the interests of both home-seekers and home-builders, and of the future balanced

development of the housing finance market, that the rate of new loan approvals by the permanents begins its customary seasonal up _ saw ing as

soon as possible.

I feel sure the building society movement can loo-_ for r 'ard to

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continuing sounaly--based Growth. Within a matt; r of weeks, the co •-oDerative housil9 societies will be receiving ng the 1970-71 advances from the Home Builders' Accounts. These advances are growing year by yea . Although it will not be easy, I also wish these societies

sucOass in attracting as much private money as they can for the

formation of new societies. Although the funds received will not be cheap money, they will be relatively cheaD. We look to the

terminating societies to do all that they can to meet the housing needs of low and moderate income amilies.

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