The controversial Help to Buy scheme has come under renewed attack with former Chancellor Lord Lamont warning it could encourage buyers to take on too much debt.
This follows CML chairman Nigel Terrington's suggestion earlier this week that the property market risks becoming addicted to Help to Buy and other government stimulus.
Lord Lamont praised the government's attempts to improve the housing market, but warned that potential dangers must be monitored. “There is no housing bubble at present, but there will always be a danger of one developing and it is in no-one’s interest that houses should become more unaffordable.
"The housing situation certainly needs to be watched closely for any signs of a bubble emerging, to prevent any future misery for property buyers.
“My concern is that Help to Buy may encourage people with 95% mortgages to gear up too much.
"Banks have to make the commercial judgement. In a few years when rates rise, after 2016, according to the Bank of England, it is important that new buyers are able to continue to service their mortgages."
Help to Buy has also come under fire from property entrepreneur Will Davies of Aspect.co.uk, who warned it could create another credit crisis.
The former mergers and acquisitions expert at Societe Generale said: "George Osborne should stop lending to people who can't afford to buy houses.
"We will face a similar problem where we lend to people without stable employment or an ability to pay back the mortgage which started the credit crisis in the first place".
"The other problem is that the scheme is artificially driving up house prices. We don't need a government solution to provide more lending for a problem caused by lending.
"This scheme smacks of short termism and is an effort to vote win."
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