Evening star. [volume] (Washington, D.C.) 1854-1972, 1956-12-02
FILA Increases
Interest Rate
To 5 Per Cent
BY the Associated Press

DOpoACA VIC AAAbNA Cob lobC OAl 4 IN |
home loans from Az to S per
cent in move designed to prime
the dwindling flow Of mortgage
funds available to prospective
home buyers.
On Capitol Hill, the Govern
bent action was denounced by
Senator Lehman, Democrat of
New York. as an added hardship
on low and middle income groups.
He called for a congressional
Investigation.
But from another quarter,
Representative O'Hara, Democrat
Of Illinois, a member of the
House Subcommittee on Hous-
ing, suggested the possibility Of
congressional action to raise the
rate of Government-guaranteed
CT home loans as we'll.
The increased interest rate on
loans insured by the Federal
Housing Administration becomes
effective December on future
FILA commitments. 1t was de-
scribed as a decisive step to help
home buyers to obtain mortgage
financing"
Economy Seen Involved
Albert M. Cole, Housing and
Home Finance administrator,
said the Importance of the Gov
eminent action was MANIFOLD. /"
asserting:
Primary we are thinking in
terms Of people. People in Amer
lea want to buy homes and this
will assist them to get the A.
nancing they need.
I'VE cannot afford to let the
vital housing portion Of our eco
nomic life dwindle to a point
that jeopardizes our productive
capacity and threatens the jobs
Of many thousands of people
through the country working in
the BODYBUILDING industry"
The practical effect of yes
terday'S action should make it
easier to get a home loan be-
cause of the more attractive re-
turn to lenders, but at the same
time means an increase Of mil
lions of dollars in financing costs
to future home owners.
Gil Loans Unaffected
Translated into terms Of a
$4,000 25-year mortgage, the
one-half per cent interest hike
adds nearly 5000 in interest costs
to the total amount of repay
ment, according to FILA figures.
On such a mortgage the
monthly payment would 60 up
from $3.50 to $3.50, the in
crease rejecting the higher in
terest rate.
The increase in FILA interest
rates does not affect the AZ per
cent rate on CT home loans
guaranteed by the Veterans ADJ
ninistration. This rate is fixed
by Congress. and any increase
would have to be approved by |
both House and Senate.
In raising the possibility that |
Congress will follow the action
of FILA in respect to CT loans,
Mr. O'Hara told newsmen he ex-
poets the housing subcommittee
to discuss such a step before
Congress returns January 8.
Change In Law Seen
There is no question but that |
mortgage money is drying up,"
Mr.. O'Hara said.
Representative Ayres, Repub- |
lican of Ohio, predicted last
Thursday that Congress would
change the CT home loan law
next year.
Senator Lehman, who is re-
firing in January, said he re-
garded the increase in the FHAI
interest rate las part Of the con-
sequences Of the administrations |
tight money policy which is |
causing tremendous hardship tol
those In the low income and mid |
die income brackets.
THE whole policy has to be |
Investigated" he said. Il hope
and trust it will be investigated |
In the next Congress.
The increase in home MORTGAGE
Interest does not effect home re-
pair loans.
Other Rates Affected
But along with it, the Govern
ment upped the interest rate on |
FILA multi-family housing mort
gage loans from ~ to Az per
cent, and increased to 5 per cent
the rate on all FILA mortgages
insured under the urban renewal
and rehabilitation programs.
FILA Commissioner Norman p
Mason said the new rates can,
upon the lenders request, be
made effective on applications
for mortgage insurance now in
process at any point up to final
Endorsement.
The interest rate increase came
as the latest move by the Gov
eminent to break the bottleneck
In credit on new homes. which
are being started this year at a