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Waverley Borough Council Committee System - Committee Document

Meeting of the Executive held on 06/03/2007
APPENDIX C - VARIABLE INTEREST MORTGAGES - VARIATION OF MORTGAGE INTEREST RATE



Summary & Purpose
The purpose of this regular six-monthly report is to seek the Executive’s approval to the ‘local average rate’ for the period 1st April 2007 to 30th September 2007 and to confirm the rate of interest chargeable on variable interest rate mortgages granted by the Council.

APPENDIX C
WAVERLEY BOROUGH COUNCIL

EXECUTIVE – 6TH MARCH 2007

Title:
VARIABLE INTEREST MORTGAGES - VARIATION OF
MORTGAGE INTEREST RATE
[Wards Affected: N/A]

Summary and purpose:

The purpose of this regular six-monthly report is to seek the Executive’s approval to the ‘local average rate’ for the period 1st April 2007 to 30th September 2007 and to confirm the rate of interest chargeable on variable interest rate mortgages granted by the Council.

Environmental implications:

There are no direct environmental implications from the recommendations in this report.

Social / community implications:

There are no implications arising from this report.

E-Government implications:

This is purely a monitoring report and therefore has no E-Government implications.

Resource and legal implications:

This report has no new financial or legal implications.

Introduction

1. Variable interest rate mortgages granted in the past by the Council fall under two different Housing Acts. Under both schemes, it is necessary to calculate, on a six-monthly basis, the ‘local average rate’. The rate is fixed at 0.25% over the Council’s own borrowing costs calculated in accordance with ‘proper practices’ as defined in Section 66(4) of the Local Government and Housing Act 1989.

2. The base lending rate last increased on January 11th 2007 from 5.0% to 5.25% and since then rates are ranging from 5.25% to 5.9% for varying investment periods. It is also possible that there may be a further rise in the base rate during the next 6 months. Major Building Society rates for existing borrowers currently range from 6.64% to 7.34%. It is therefore considered appropriate that the ‘local average rate’ should be increased from 5.25% to 6.25% with effect from 1st April 2007.

Housing (Financial Provisions) Act 1958 (Section 43)

3. The interest rate chargeable on mortgages pursuant to the above Act is determined by the Council. It is considered that the interest rate chargeable for the period 1st April 2007 to 30th September 2007 should be in line with the ‘local average rate’ of 6.25% p.a. This rate applies to 6 mortgages.
Housing Act 1985 (Schedule 16)

4. The interest rate chargeable on Council mortgages pursuant to the above Act should be set at the higher of either the Council’s ‘local average rate’ of 6.25% p.a. or the ‘standard national rate’ which is periodically set by the Department for Communities and Local Government (DCLG) and currently stands at 6.89% p.a. Therefore the interest rate to be charged on these mortgages should be the ‘standard national rate’ of 6.89% p.a. for the period 1st April 2007 to 30th September 2007, an increase from the present rate of 6.28%. This rate applies to 19 mortgages.

Recommendation

It is therefore recommended that:

1. the ‘local average rate’ for the period 1st April 2007 to 30th September 2007 be declared at 6.25%p.a.;

2. the rate of interest chargeable on mortgages under the Housing (Financial Provisions) Act 1958 (Section 43) be 6.25% p.a. for the period 1st April 2007 to 30th September 2007; and

3. the rate of interest chargeable on mortgages under the Housing Act 1985 (Schedule 16) be 6.89% p.a. for the period 1st April 2007 to 30th September 2007.

Background Papers (DoF)

There are no background papers (as defined by Section 100D(5) of the Local Government Act 1972) relating to this report.

CONTACT OFFICER:

Name: Glennis Pope Telephone: 01483 523252
Comms/exec/2006-07/311