Financial secretary to the Treasury Sajid Javid has dismissed concern over a “cliff-edge” that could be created when the government pulls its mortgage market stimulus, citing “mechanisms to adjust scheme parameters” that will be deployed to phase the scheme out.
Addressing worries voiced elsewhere that the scheme could become a permanent feature that holds up house prices artificially, Mr Javid said during a speech at the Council for Mortgage Lenders that the various interventions were not “business as usual”.
Tackling concerns about Help to Buy highlighted by among others the Treasury Select Committee, Mr Javid said the government will consider the best way of managing the exit from the mortgage guarantee.
He said: “As you’ll know, we’ve always been absolutely clear that this is a three year scheme, but I am aware that some in the industry, including the CML, are concerned about the end of the scheme creating something of a ‘cliff edge’.
“We do understand these concerns. But there are mechanisms to adjust the scheme parameters, which we’re confident will help to smooth the transition, and we’ll make a judgement about how best to use those flexibilities according to the market conditions at that time.”
Mr Javid also questioned the merits of the European Union mortgages directive and revealed he is unconvinced of the benefits of these regulations to UK consumers or to UK businesses. He said wherever possible the government will minimise the disruption the directive will cause.
He ended his speech be stating he was “incredibly grateful” to work so closely with lenders while warning them not to see the government’s mortgage interventions as part of a new “business as usual.”
Also also speaking at the event, Paul Smee, director general of the Council of Mortgage Lenders, said with under a month to go, the industry does not anticipate major problems with the Mortgage Market Review implementation.
But he added there is still a potential for unintended consequences due to the complexity “but not due to the inattention of the regulator or industry.”
He said: “We hope the regulator understands the scale of the change and exercise a degree of patience regarding unintended technical breaches in the beginning.”
