MortgagesMay 15 2013

Help to Buy to spark housing bubble: Fathom

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ByIona Bain

A report published by the think-tank has suggested that Help to Buy, which allows those with a deposit of 5 per cent to receive an interest-free loan of up to 20 per cent, will raise house prices by almost 30 per cent by 2015.

Andrew Bridgen, senior economist for Fathom Consulting, said: “Help to Buy is a reckless scheme that uses public money to incentivise the banks to lend precisely to those individuals who should not be offered credit.

“Had we been asked to design a policy that would guarantee maximum damage to the UK’s long-term growth prospects and its fragile credit rating, this would be it.”

Adviser view

Paul Good, mortgage adviser for Joslin Rhodes in Stockton-on-Tees, said: “Help to Buy will bump up the average house value once the market picks up again. Moreover, if people come to remortgage in the future, they are tied to the mortgage company that approved them and are totally at their whim.”