Lenders and borrowers are in danger of becoming addicted to Help to Buy and other property market stimulus if they aren't weaned off subsidies soon, the CML has warned.
CML chairman Nigel Terrington said Chancellor George Osborne's flagship scheme was a short-term fix that desperately needed a clear exit strategy, according to a report in The Guardian.
He told a mortgage conference in London: "It's important that Help to Buy doesn't morph into the US scheme, Fannie Mae.
"It should be a time-limited intervention to correct what is seen by the government as a temporary failure in the market to provide high loan-to-value mortgages in quantity. It must be a temporary fix, not a permanent feature."
Terrington, who is chief executive of Paragon, added: "We don't want our customers – or the lending community – or indeed the political party of the day – to become addicted to the scheme as a permanent component of the UK's financial system."
Help to Buy is firing demand from buyers with small deposits, said Jonathan Hopper, managing director of buying agents Garrington Property Finders, in response to yesterday's Halifax figures showing prices rose 6.9% over the past year. “Despite a slight drop off in price growth in the last three months, demand amongst buyers is there now and that's likely to drive prices higher.
"The housing market is building up a head of steam. Price rises are being driven by an incongruous but potent mix of confidence and fear.
“Buyer confidence has been stoked by a run of upbeat economic news and cheap mortgages, and a wave of pent-up demand has been unleashed by people’s nagging fear of being left behind as prices head skywards once again.
“Help to Buy is firing demand from those with small deposits. But for many of those taking the plunge and buying for the first time, the decision is more about heart than head - and the gut feeling that the current window of affordability will soon close.
“Real wages have fallen more than 9% since early 2008 - the deepest and longest period of decline since reliable records began in the mid-19th Century.
“Such strong house price growth could quickly push property ownership back out of reach for many. That may cool a market that is already at serious risk of overheating."
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