Is there anyone left who thinks the Government’s Help to Buy scheme is a good idea? This week’s Spectator splashes on the risks of this property bubble wheeze.
Merryn Somerset Webb warns that the scheme, which underwrites mortgages, will lead to rising house prices. She argues that ‘if anyone other than the government manipulated a market to this extent, it would be illegal’:
The latest is the one that worries even the king of stimulus himself, Sir Mervyn King. It’s called Help To Buy, Osborne’s latest market-distorting scheme that effectively forces the already overcommitted taxpayer to underwrite £12 billion of mortgage lending to people who haven’t got an adequate deposit of their own, or who lack the income to have a go at producing one and who therefore shouldn’t really qualify for a mortgage at all.
Still, however Sir Mervyn feels about it, most people think the scheme will work as long as borrowers are persuaded that it is possible for house prices to keep rising — as they usually do.
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