Mortgages  

Gov’t needs Help to Buy exit strategy – MPs

The Treasury select committee maintained its critical stance on the government’s flagship housing initiative as it published its 88-page inquiry into the chancellor’s Autumn Statement last weekend, echoing industry warnings of a “cliff edge” ending to the scheme.

The MPs agreed with Paul Smee, director general at the Council for Mortgage Lenders, who spoke during a select committee hearing on the issue of the need for a proper “exit strategy” to avoid a sudden drop-off in market activity.

The select committee did not put forward suggestions about how to avoid this danger, but discussed the option of tapering the scheme well before its current end date in 2016.

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The government must also consider whether to give the Financial Policy Committee at the Bank of England – charged with monitoring the scheme’s effect on the economy – the final say on whether to continue the scheme beyond 2016.

The MPs comments came as research revealed the widespread belief among brokers that the Help to Buy scheme will be wound down before the end of the three-year period.

Half of those surveyed by the Intermediary Mortgage Lenders Association said they anticipated the scheme will be closed to those applying for 95 per cent loan-to-value mortgages by 2016.

Peter Williams, executive director at IMLA, said: “The industry is facing a considerable uplift in regulatory controls over the next two years. It will be essential to track how those bed in and what their consequences are for specific market segments. Armed with that understanding, we can then be much clearer as to how and when we might best phase out the government schemes.”

Adviser view

Colin Parkin, managing director of Midlands-based Ample Financial Services, said: “People really need help to get on the housing ladder within the M25, and clients still have to jump through hoops to get mortgage approvals. One has to be squeaky clean, because even a late payment on a credit card can lead to rejection.”