View more on these topics

Housing bubble is ‘top threat to Help to Buy’

Brokers and lenders are united in their belief that a house price bubble represents the biggest threat to Help to Buy’s success.

Research from the Intermediary Mortgage Lenders Association, which polled 300 brokers and 16 of its 20 members in July, shows 60 per cent of lenders and 59 per cent of brokers believe artificially inflated house prices are the biggest threat to the Help to Buy scheme. Imla members anticipate prices to rise by 2.7 per cent by the end of the year.

Brokers cite a lack of lender support and an over-reliance on Government funding as the second and third biggest threats to the scheme’s success, with 49 per cent and 38 per cent of the votes respectively.

Lenders put an over-reliance on Government funding and restrictions on lenders’ capital ratios in joint second, both with 48 per cent of the vote.

Imla executive director Peter Williams says: “There is a clear consensus that first-time buyers stand to benefit most from the second part of Help to Buy. But if house prices continue to rise for the duration of the scheme, then in essence we will be giving with one hand and taking away with the other.”

Help to Buy is made up of a £3.5bn shared equity loan scheme for new-builds, which launched in April, and a £130bn mortgage indemnity guarantee scheme open to all properties, which will launch in January next year.

Mortgage Advice Bureau new homes director Andy Frankish says: “There is a distinct danger of a house price bubble. The only way we can control that is by all parties, and that includes brokers, lenders, valuers and developers, acting responsibly.”

Separately, think-tank the Adam Smith Insitute called on the Government to scrao Help to Buy and instead focus on ideas to improve supply such as abolishing affordable housing quotas and releasing more farmland for development.


Retail investors slam Co-op on rescue deal

Retail investors in the Co-operative Bank have heavily criticised it for keeping them in the dark about the terms of a controversial rescue deal that will see them forced to exchange their bonds for equity in the bank. Earlier this week, the bank published its half-year results in which it posted a £709m loss, driven […]


Simple products still need thought

As the simple products conversations between the industry and the government continue – creating protection products that are less complex and simpler for the general public to understand – we need to tread carefully when discussing the overall simplification of income protection and critical illness products.  Simple is good when you have clear groups and […]

Skipton removes five-stories rule

Skipton Building Society has removed a restriction that would previously see it reject an application from a borrower who wanted to purchase a flat in a building more than five stories tall. Previously, only flats within buildings of five stories or under and which contain 48 units or less were allowed. However, this restriction has […]

Default image

Health Shield announces strong results

Health Shield, a corporate health cash plan provider, has announced that it has increased gross annual premium income to more than £25m in another year of strong organic growth.


News and expert analysis straight to your inbox

Sign up

Why register with Mortgage Strategy?

Mortgage Strategy continues to be the market-leading B2B mortgage publication in the UK, and provides trusted, independent insight with the aim of helping, promoting and analysing the latest developments for mortgage professionals.

News & analysis delivered directly to your inbox
Register today to receive our range of news alerts including daily and weekly briefings

Mortgage Strategy Events
Be the first to hear about our industry leading conferences, awards, webinars and more.

Research and insight
Take part in and see the results of Mortgage Strategy's flagship investigations into industry trends.

Have your say
Only registered users can post comments. As the voice of the adviser community, our content generates robust debate. Sign up today and make your voice heard.

Register now