National Affairs: More Money for Housing

An unhappy victim of the Federal Reserve's "tight money" policy has been the housebuilding industry. The banks, with more borrowers than money available, have looked down their noses at Government-backed mortgage loans with their relatively low (4½%) yields in favor of higher returns in other fields. Result: a drop in new housing starts from 1,329,000 in 1955 to the current rate of 1,100,000 a year. Last week, to sweeten up such loans for the bankers—and thus make more funds available to home builders—the Government raised the interest rate on new FHA-backed mortgage loans to 5%. The order did not affect Veterans Administration mortgages—still fixed by law at 4½% — but the Administration is expected to ask Congress in January to bring the VA rate into line. Said one Government official: "People in America want to buy homes, and this will assist them to get the financing they need."