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About The Battalion. (College Station, Tex.) 1893-current | View Entire Issue (Nov. 7, 1979)
Page 6 THE BATTALION WEDNESDAY, NOVEMBER 7, 1979 Cells may be slaves of future Plant cells could be translormed into billions of microscopic slaves driven to produce the medicine, food and fuel demanded by future society, said a Texas A&M Universi ty chemist. But for that to happen, more attention must be given to ways of deriving such compounds from plant tissue cultures, methods that are too expensive and unpredictable right now, said Dr. S.L. Lee of Texas A&M. Two problems in deriving the compounds, he explained, are the immense varieties of chemical makeup and reactions in plants, and the high expense of bringing tissue culture production to its optimal level. Its application will likely be li mited to synthesis of drugs such as anti-cancer solutions or antibiotics. But, said Lee, the technique is already being used to select and im prove cell lines of crops and trees for improved production. Prime rate rises halt mortgage loa Hou-^e oc deh's'e-ry) coti or e>A6,-<e>A%z By GARY A. WELCH Battalion Staff Now that the prime lending rate has reached 15 percent for the first time in history, local savings and loans have virtually stopped giving home mortgage loans. This follows the action of local banks, who stop ped giving home mortgage loans a few months ago, when the prime rate topped 14 percent. “We re not making home loans right now,” said J.B. Hervey, presi dent of Community Savings and Loan. “About three weeks ago we stopped making them until the eco nomy levels out a little. We are using the money instead for short-term in vestments.” The recent jump in the prime rate, the chief indicator of interest rates, has made it more profitable for lending institutions to invest funds in other areas. This is especially true in Texas, where state usury laws have only recently been amended to allow home loans with up to 12 per cent interest. Banks, savings and loans and other lenders are now us ing funds to buy bonds, certificates of deposit and other short-term in vestments that are now yielding up to 14 percent, and no longer find it profitable to lend money at 11 or 12 percent. One reason interest rates have risen so much is the inflation rate, which has averaged over 10 percent for the last two years. Inflation tends to increase interest rates because it raises the cost of lending money, re sulting in high finance charges that The housing investor most affected by the tight money situa tion, however, is the average home buyer, who usually must borrow money to make a purch- are necessary to offset the currency’s drop in value. High interest rates can also contribute to inflation by raising businesses’ borrowing costs, which are usually passed on to the consumer through higher prices. However, many area business men believe both the inflation rate and interest rates will peak during the first half of next year, making home loans feasible again. “I am anticipating high interest rates for the rest of this year, ” Her vey said, “and to about the middle of next year.” When the prime rate drops and home loans become profit- TECHNOLOGICAL CHALLENGES. Lasers. Space systems design. Nuclear energy. Air Force engineers and scientists are at the forefront of today's fast-moving technological frontiers. WANT TO JOIN THE TEAM? If you're graduating with or have a degree in engineering, computer science, mathematics, meteorology, or physics, Air Form Officer be your first step. Air force oike;... ,iawnei. medical care, 30 days paid vacation a year, and often postgraduate degree opportunities. Air Force ROIC scholarships may be available if you have at least two years of college remaining. They offer full tuition, fees and $100 a month tax free TALK TO YOUR AIR FORCE RECRUITER OR AFROTC CAMPUS REPRESENTATIVE. Mai! in the coupon Or rail toll free 800-5?3-5000 (PA: 800-36/ -.FT ' It’s a great way of life! MR FORCE <57 able, he said, they will start making home loans again. The current loan situation has had some effect on all people looking for housing in Bryan-College Station, especially those who are interested in housing as an investment. The least effect has been on those who rent, because they do not re quire loans for housing. A person who rents is not really investing his money, he is only paying for a ser vice, and receives no return on his money. But renters can expect rising rents, which are loosely tied to infla tion. Marlene Farrar of A&M Apart ment Placement Service said area rents now are about $200 for unfur nished efficiency apartments, $215 for one-bedrooms, $250 for two- bedrooms and anywhere from $250 to $400 for two- and three-bedroom houses. If rents follow local and na tional trends, which have shown large increases in all highly inflation ary years, they should rise about 10 percent a year in the near future. The housing investor most affected by the tight money situa tion, however, is the average home buyer, who usually must borrow money to make a purchase. Home loans of this type are given for an average term of 25 to 30 years and cover an average of 80 percent of a home’s cost, thus requiring a 20 per cent down payment. Loans from local institutions are not available to any of these inves tors. If they wish to buy they must obtain financing elsewhere. If they can find financing, however, the in vestment opportunities are good, even though high interest rates raise the cost of the investment and thus lower the yield. For example, if a family head put $10,000 down and borrowed $40,000 at 12 percent for 30 years to buy a $50,000 house, then when the loan is repaid in 30 years and the house has approximately quadrupled in value to $200,000, the investor’s profit would be about $44,000. If the money had been available at 8 per cent interest (the January 1978 prime rate), however, the profit Moderate increases are expected for apartments and other multi family units, but construction of these units will not dominate the industry as it did in the mid- 1970s housing boom, caused mainly by large increases in the student population at Texas AirM University. l_l 846-6714 & 846-1151 846-6714 & 846-1151 UNIVERSITY SQUARE SHOPPING CENTEE - ['A zinger! A tour-de force! PLAYBOY AL PACINO would have been around $84,000 be cause the 4 percent reduction in the loan rate would have reduced total interest costs from $106,000 to $66,000. Similarly, a person renting out a single house would make $40,000 less over the same 30-year period with a 12 percent loan than with an 8 percent loan, a difference in return of over $1,300 a year. But even with high interest rates and the difficulty of getting financ ing, housing remains a good invest ment because it is one of the few historically successful hedges against inflation, especially in this area, which is experiencing a steady popu lation increase. In the last four years, the average price of a house in Bryan-College Station has risen about 10 percent per year, while inflation has aver aged about 8 percent. Other forms of investment, such as certificates of deposit and state, local and corpo rate bonds, have lagged behind infla tion, yielding from 3 to 5 percent a year. Perhaps the best aspect of invest ment in housing, however, is the eli gibility for tax deductions. Both small investors and large ones, such as builders and realtors, can deduct from their taxable income both in terest payments on loans ai,:| erty tax payments. Many large investors take cess one step farther, realtors obtain large loans i speculative housing comnn| " for terms of 25 to 30 years, first few years can deduct ii which makes up the majorih payments, from their ti come. After a few years, investor begins paying on cipal of his loan and begins tax advantage of interest pass he can sell the housing again, so both he and hisbinj start this advantageous invi process again. In the last 10 years, buildet>| experienced about a 50 jump in finance costs, buthi increased their profits 50 mainly by taking maximum™ tage of these tax breaks and! 1 . ting the costs of materials andi ( Even with the scarcity o( j loans, the local housing ini’ "We're not making hom right now," said J.B. president of Community St. and Loan. "About three x ago we stopped making tld tu the economy levels ou(d We are using the money ii for short-term investment: COMING SOON!! M LEGACY"(PG) CINEMA II A temptingly tasteful comedy for adults 11 who can count. BLAKE EDWARDS D 5 AI 2 L 5 Y I ff41^^99 7:.4C, ~--- R 9:55^ cxrxixrxrTYTTTTyR^rr not expected to suffer. In fad interest rates begin to fall in ture, the Bryan-College S may see another boom simikl housing boom from 1973-78 Brazos County is rated as the top 250 growth areas in tbs try, with some predictions percent increase in populatiosl next 10 years. Since most population increase is e: come from new industries workers and their families, mand for single-family should increase, boosting tli) construction industry and existing housing a better inv by driving up prices. Moderate increases are for apartments and other family units, but consi these units will not dominate dustry as it did in the rnid-l housing boom, caused large increases in the student lation at Texas A&M Univei A part of the expected popi increase will be a result of the al population migration trei the last decade there has been eral population shift from and Northeast to the “sunbelli of the South and West. Many are leaving colder areas bi high heating costs in the wintf are looking for a climate anda that will save both energy money. The price of home heatingoii up over 40 percent last year ft while natural gas rose almost cent. These large increases “THE tim be 75 LEBRy spo a.ir EME1 tioi the CIRC! SOCI1 Roc dua BACK mit in 1 GUAT cha attc PEAC Lo\ PHI S 7:31 TAMl at 5 AMEI ciat Roc YM begin to force many housingnf ail energy consumers into areas: country where energy costsarfl er, especially in areas such asEn College Station, where the s| : ;q os t-j-gj economic growth provides dents now c opportunities and the possibt| or me ^ r0 p f advancement to families havi the llniw start anew. student cm ■f Eight of .now accoui i cent of th STOP IT BEFORE. tT STARTS , The tabu Now Better Than Ever. 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