Evening star., 1953-05-03
Interest Rates Raised
On u. ). Home Loans,
Ending Long Dispute
Bv Robert J, Lewis

Inc Government y q y
raised interest rates on home
loans in another move in its un-
mistakable tighter money policy.
The administration acted to
raise interest rates on Govern
ment-aided housing by from one
quarter of one per cent to one
half of one per cent.
ClimaXing a series of Treas
ury-sponSored moves supporting
higher interest rates, the action
was reported to have been de-
cided on by the White House
itself to settle a long drawn out
controversy over whether or not
home loan rates should be raised.
GI Mortgage Rates.
Veterans Administration rates
on GI mortgages were raised
one-half of one per cent across
the board bring them up from 4
per cent to Az per cent.
Federal Housing Administra-
ton rates were raised one-quarter
of one per cent. Since FILA in
the past has had a number of
different rates. the one-quarter
of one per cent increase means
that in the future some FHA
loans will be at a rate of 414
per cent. some at Az per cent.
and others will remain at 4 per
cent.
In general, however, both FILA
and CT rates for single-family
homes. will now be equal at Az
per cent. Previously on such
loans. the CT rate was per cent
and the FILA rate was AZ. Rates
for apartment construction in
the future will be Az per cent.
Rates for military. defense and
cooperative housing will remain
at 4 per cent.
The increase will cost veteran
borrowing $4,000 on a CT mort
gage an additional $840 over a
25-year loan period. The loss
would be greater if interest on
this amount were to be figured
In.
The additional cost on an FILA
mortgage of the same amount
for a 25-year payoff period will
be $423.
Present home owners are, of
course. not affected.
Action Is Reluctant
Two leading housing officials
said the increases we're author
lied reluctantly.
Veterans Administrator Carl
r. Gray, jr.. said the action was
taken only as last resort and
after extended consultation with
other Government agencies con-
cerned with housing and fiscal
policies"
Housing and Home Finance
Administrator Albert M. Cole. a
supporter of the move. said the
increases were approved with
reluctance" but that in his
opinion they were necessary to
keep such financing adequately
available"
The lending industry, which
long has been actively urging
the Government to push up the
rate, was jubilant. In Chicago.
Charles L. Clements, president of
the United States Savings and
Loan League, called the move a
courageous step" that would
"revitalize" the housing indus
try"
FHA Commissioner Guy T. o.
Hollyday said one of the con-
tributions made by the move is
that ''indecislon in the mortgage
money market has been removed
and the industry can resume its
activity"
This comment referred to the
fact that lenders generally had
been awaiting a decision, and
meanwhile many had held off
making loans in recent weeks.
FHA explained that the rea-
son interest-rate increases were
not put into effect for Wherry
Act military housing. defense
project housing. and co-opera-
tive housing is that rates for
such construction are fixed by
law and could not be changed.
Wherry Act military housing
Is built by private builders at or
near military installations with
generous Government aid. De-
fense housing is programmed"
by the Government for con-
Struction in defense production
areas having a tight housing
situation.
VA Had Fought Move.
A boost in the GI rate was
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