THE HALIFAX
BUILDING SOCIETY
ONE HUNDRED AND THIRTEENTH ANNUAL MEETING will be held on. 23RD MAY, 1966
Statement by IAN A. D. MACLEAN, ESQ. President of the Society (Abridged)
DURING a year which was not without vicissitudes the assets of the Halifax grew by over £135 million to £927,891,560, a growth rate of 17.1%. Receipts from investors amounted to £247,786;887 and with- drawals to £141,346,366, the resultant net investment inflow being £106,440,521. The Society advanced on mortgage £167,529,634—nearly £8 million more than in the preceding year—and received back from borrowers £129,327,790 by way of subscriptions and repayments. These figures give the main outlines of a year of record progress.
The Halifax, in common with other societies, started the year with an announcement that the interest rate paid to investors would be 33% and that charged to borrowers, 63%. In the early months this rate structure attracted a satisfactory volume of new investments, but the ratio of withdrawals to receipts was high, competition from local authorities being possibly the largest single reason. In July, when the rate of interest to investing shareholders was increased to 4%. there was a radical change in the position, resulting in a greatly increased in- vestment inflow which has been maintained.
The Society is currently offering advances at the rate of well over £200 million a year, and our branches in the main are inundated with applica- tions. For this reason the Board are fully content that the Society's liquid assets are on the high side (17.9% at the 31st January 1966 compared with 14.7% at the 31st January 1965): this high liquidity enables us to face with equanimity the heavy • con- tingent demand on the Society's funds which the current level of mortgage offers represents.
INTEREST RATES When the interest rate paid to investors was in- creased in July 1965 it was recognized that the resultant margin would, in the long run, be in- sufficient to enable a high rate of growth to be maintained indefinitely. In the short run, however, there were a number of factors which argued against any precipitate further increase in the mortgage rate. The Board, therefore, subscribed to the view that some time should pass before the margin between investors' and borrowers' rates was once more in- creased. The short run must soon be regarded as over so that, in the absence of some substantial concession in the Budget, a structure of interest rates which will allow a wider margin will have to be adopted.
SUBSIDISED MORTGAGES
The scheme for subsidised mortgage payments announced by the Chancellor of the Exchequer and the Minister of Housing on 1st March 1966 is de- signed to enable people with small incomes to get mortgages on terms comparable to those enjoyed by people who are able to obtain relief from income tax on the mortgage interest which they pay.
The Board of a building society cannot rationally object to the idea that the burden of repayments for some of its borrowers should be lightened and that there should be an increase in the numbers of those whose incomes will permit them to become home-owners. At the same time there are one or two comments which 1 feel should be made.
First, and obviously, if one of the objects of the
proposals is that home-ownership shall be brought within the reach of more people, that object will be defeated unless there is a corresponding increase in the number of houses available for buying. Failing this, the effect can only be that the inflation in house prices will be maintained an-d even in- creased.
Regarding the details of the proposed scheme, I understand that consultations between building societies and the Government are to take place and I can only add my own hopes to those already expressed by others that the final scheme, when it emerges, will be considerably more simple to operate.
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