If this recommendation is accepted by Members, a circular letter will be sent by the Financial Secretary to all licensed banks and registered deposit-taking companies, inviting them to commit funds to the scheme. Those institutions which have already committed funds under the existing formula for Phases II and III will be offered the oppor- tunity to convert those funds to the new interest rate formula.
Public Relations
30
This proposal is likely to be welcomed by many banks and deposit-taking companies (but it will no doubt be ignored by some). It will however, be greeted with hostility by potential purchasers of flats, who are likely to seek as many allies as possible in arguing against the proposal. It will, therefore, be necessary to set out very clearly the reasons why the increase in the rate of interest is necessary. It will be emphasised that the prices of H. O.S. flats, being sold at cost, are appreciably lower than private sector developments.
Advice Sought
31
Members will be invited to advise whether the interest rate formula set out in paragraph 27 should be adopted for mortgages on flats built under Phase IIa of the Home Ownership Scheme, and on flats built under the first 2 projects of the Private Sector Participation Scheme.
(The Secretary for Housing (Mr A.J. SCOTT) and the Secretary for Monetary Affairs (Mr D.W.A. BLYE) will attend before the Council for the discussion of this item).
25th October 1979
(CR 1/1116/76 V)
COUNCIL CHAMBER
CONFIDENTIAL #*