Evening star., 1936-08-15
ENGLAND LOWERS
MORTGAGE MONEY
$40 Per Cent Figure Based
on Survey Last Year by
the Economist.

Mortgage money may be borrowed
In England at $40 per cent, the low
est rate since 1925. Building and loan
societies are the great funds which
support Britains real estate activity.
This figure is based on a survey made
last year by The Economist of Lon
don. Judging from the survey, at no
time in the 10 years covered has the
charge for real estate money in Eng
land been as high as in this country.
The unemployment of capital in
industrial and other commercial fields
produced surpluSes which sought out
let in the real estate field. The fail
ure to find employment for these
funds resulted in a reduction of the
interest rate in the hope of creating
q demand for this capital.
Labor Review Observations.
The Monthly Labor Review for June,
discussing the Economists survey of
the British building and loan aSsocia-
tions said:
The trend was definitely toward
lowered interest rates in the last six
years covered by the study. AS it be-
came increasingly difficult to place
money advantageouSly in industry
and the war loan was converted at
lower rates money was attracted to
building societies. Shares paid 4 per
cent and were tax free and deposits
brought SO. per cent. Societies found
it necessary to curtail the acceptance
of new funds, and ultimately interest
on shares and deposits was reduced
and some Of the advantages of cheap
money were passed on to borrowers,
but not on a uniform basis.
ITO show the movement in average
effective rates on shares, deposits and
mortgage loans computations have
been made in the Economist survey
of interest rates based on the mean
of the opening and closing totals for
shares deposits and mortgages as be-
ing the most representative figure to
which the totals of share, deposit and
mortgage interest apply. Complete
accuracy is not claimed for the re-
suits, but they show a decrease in
interest rate from 438 per cent in
1925 to 355 in 1885 for shares, from
385 to 2.97 for deposits and from 5.85
per cent to $40 for mortgages. Most
OF the reduction in interest on shares
and deposits occurred in the period
beginning with 1882. Interest on
mortgages was reduced less than on
shares and deposits, but the report
states that on the average money was
obtained more cheaply than $40 pei
cent at the time of the study.
Extent of Building Loans.
"Of the almost two and one-hali
million houses built in England and
Wales between 1919 and 1884, SiI
Harold Bellman estimates that nearly
one and one-third million were either
erected or purchased with the help
of building societies. While business
tance of building societies in thai
region is still small.
Figures have been compiled tc
show the size of mortgages placed by
ninety-eight societies for six selected
years between 1925 and 1885. In this
period mortgages of less than f50C
decreased slightly, from 468 to 443
Der cent of the total; those of $500 to
$1,000 increased appreciably, from
30.7 to Ala per cent of the total;
those of $1,000 to $4,000 decreased
from 1877 to rs per cent; those OF
$4,000 to $4,000 from 81 to 1.9 per
cent and those over $4,000 from SIS
to 81 per cent of the total. Since
the building g-sbciety movement is de-
signed to aid the owner-occupier, over
851a per cent of total loans have re-
Gently been made to those able to
Afford houses Of up to e.. 900 in value. ~