Evening star. [volume] (Washington, D.C.) 1854-1972, 1948-08-17
|GI Home Loan
Interest Boost
Expected Soon
VANow Making Study
Of Increase to 4H%
Okoyed by Congress
By Robert J. Lewis

A boost in the interest rate on
CT home loans from the present
I per cent to ~ per cent, author
lied by Congress at the recent spec
cial session. can be expected soon.
it was learned today.
This will mean that rising home
costs will rise still further for many
veterans.
On a $4,000 loan, the increased
cost Of CT loan would amount to
S648 over 20-year mortgage period,
q Government spokesman pointed
out.
Instead Of paying s4,544 in interest
over the 20 years, the veteran win
be paying $5,192 In interest. over
and above the $4,000 amount of the
loan, it was explained.
While the interest rate increase
has not yet been put into effect, a
study now being made BY the
veterans Administration shows that
1T Is virtually inevitable, it was said.
owing to "a number of factors"
Rate Not Realistic" Lenders Saw.
In the new housing act, Congress
authorized VA to raise the interest
rate with the approval of the Sec
rotary OF the Treasury.
This action was in line with a
proposal by mortgage lenders, who
contended that the 4 per cent rate
was mot realistic" and who pointed
to a decline in the number of
straight CT loans at the 4 per cent
rate owing to reluctance of lenders
to make such loans.
The new housing bill puts the
present per cent CT loan at an ad-
dltional competitive disadvantage"
with money lenders, owing to pro-
visions for FILA Az per cent loans
on for-sale housing embodied in the
oil, an observer pointed out.
In the past, mortgage lenders
found a combination" FHA-VA
loan advantageous in that 1t pro-
Vided a 100 per cent Government
guarantee as well as a AZ per cent
return. Many lenders, as a result.
recently insisted on such loans
rather than the straight CT loan at
4 per cent, which provided a so per
cent Government guarantee.
(: Some Opposition to Increase.
For nearly year, mortgage lend
ers have been publicly favoring an
increase in the CT interest rate.
A Government source said, how.
ever, that lately a section of the in
dustry quietly was opposing" a
boost IN the CT rate ION the score
that the CT loan even at AZ per
cent would not be as attractive to
lenders" as FHA-VA loans provide
ing 100 per cent Government guar
antee.
A AZ per cent CT loan would
still be cheaper for most veterans
than any other alternative avail
able financing, a VA spokesman
said. The present 4 per cent CT
loans are the best possible financing
arrangement available to veterans.
he said, but not all eligible veterans
are able to find lenders willing to
make such loans.
Some Loans Still Being Made.
While there has been a notable
in the number of straight
CT 4 per cent loans made recently.
they are still being made through
out the country, VA figures show.
In January, this year, for example,
$4,000 straight CT per cent home
loans were made to veterans. BY
June. the number had dropped to
$4,000 for the month.
Part of the drop probably can be
attributed to the fact that veterans
do not have an income to Justify
purchase Of houses at present prices,
an official suggested.
However, many veterans with ade-
quate incomes still are unable to
obtain 4 per cent loans, he said.
The reduction In the number of
CT loans available, the official point
ed out, comes at time when homes
are being completed at a rate prob
ably higher than ever before