The Help to Buy controversy has intensified with Liberal Democrat Business Secretary Vince Cable suggesting the scheme may have to be scrapped and Barclays chief Antony Jenkins warning of an uncontrollable house price bubble.
Mr Cable, who has previously raised doubts about Help to Buy, has now gone a step further by suggesting the second half of the scheme shouldn't come into force at all.
The "equity loan" part of Help to Buy, launched in April, gives borrowers with 5% deposits a low-cost government loan to help them buy a new-build property worth up to £600,000.
The second part, known as the "mortgage guarantee", will extend the deal to existing properties from January and is expected to have an even greater impact.
Speaking on Sky News, Mr Cable questioned whether that should come into force at all: "We should certainly think about how it should come into effect, indeed whether it should come into effect in the light of changing market conditions. We don't want a new housing bubble."
That would bring him into conflict with Chancellor George Osborne,who claimed earlier this week that high-LTV mortgages are the sign of a healthy society rather than "exotic weapons of financial destruction".
Help to Buy has already had a positive impact on house prices, with more to come. After an unusually strong summer, the housing market is set for a strong September and October.
Mr Cable isn't the only prominent figure who is worried about the prospect of another property bubble. Speaking in New York, Barclays' chief Antony Jenkins warned that rising house prices could run out of control: "We are seeing probably a more buoyant housing market for the first time in perhaps as much as a decade. That’s a bit concerning because there is the risk of a property-driven boom in the UK.
"The regulators are on it and don’t intend to let it happen, but these things can be difficult to control."
Many brokers and lenders have already expressed fears that it could cause a housing bubble.
CML economist Bob Pannell has said it is too early to call a boom, however, with housing activity moderate and affordability metrics unexceptionable.
Comments