UK Rising House Prices Will Hurt Help To Buy Program

Large numbers of mortgage lenders and brokers are predicting part of the government’s Help to Buy scheme will be withdrawn early because it is artificially inflating house prices, according to an industry survey.

Research by the Intermediary Mortgage Lenders Association (Imla), a group made up of banks and building societies that offer loans through brokers, found growing concerns that rising house prices could cause the chancellor to pull the plug on the part of the scheme that guarantees 95% home loans before the end of its planned three-year term.

Half of the brokers questioned and 46% of the lenders said they expected the scheme, which offers lenders a taxpayer-backed guarantee on loans for borrowers with small deposits, to finish early. In addition, three-quarters of lenders said they expected it to be closed early for remortgages.

In July, 60% of lenders said they thought the scheme could be derailed by rising prices. That figure which has now increased to 69%.

A key criticism of the mortgage scheme, which is available on properties priced up to £600,000, has been that it drives up demand for properties without increasing supply.

via The Guardian

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