Help to Buy moved forward three months

David Cameron says he 'won't stand by' while young people can't get on the housing ladder - so he's moved his controversial mortgage scheme forward.

by Emma Haslett
Last Updated: 08 Oct 2013
Well – we didn’t expect that. The government has decided to bring forward its controversial scheme, which guarantees 95% mortgages on all homes (not just new-build one), by three months. In an interview on the BBC yesterday, David Cameron said he would ‘not stand by while people’s aspirations to get on the housing ladder are being trashed’.

Fighting talk, that.

Never mind that it’s been criticised by everyone from ex-Bank of England governor Mervyn King to business secretary Vince Cable, not to mention Societe Generale’s Albert Edwards, who called it ‘moronic’, and Fathom Consulting, which called it ‘reckless’: Cameron is adamant that the scheme should go ahead.

‘If we don’t do this it will only be people with rich parents to help them who can get on the housing ladder – that is not fair, it is not right,’ he said. Although some argue that saddling the younger generation with thousands and thousands of pounds of debt for the rest of their lives isn’t fair or right either. Swings and roundabouts, we suppose…

There are signs the plans have been rather rushed through: just two lenders have been signed up to the scheme so far – state-owned RBS and state-owned Lloyds. That said, between them they (particularly Lloyds subsidiary Halifax) account for about a third of the mortgage market – so that’s a good start. And RBS said yesterday that it’s expecting 25,500 new mortgage customers through Help to Buy.

Coming just a few days after George Osborne gave new powers to the Bank of England to oversee Help to Buy (the idea is it will be able to act at the first sign of a housing bubble), it suggests the Conservatives are trying to quash suggestions that the scheme will cause a housing bubble. Apparently George Osborne’s speech at the Institute of Directors conference in which he said a rise in mortgage approvals comes from a ‘low base’ wasn’t enough.

Incidentally, new figures by residential property research firm Hometrack have suggested UK house prices rose 0.5% in September, their highest month-on-month increase since May 2007. And Bank of England figures out this morning showed mortgage approvals rose from 60,914 to 62,226 in August, a five-and-a-half year high.

Prices may have started from a ‘low base’ – but that’s rapidly increasing…

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