Member Article

Mervyn raises Help to Buy concerns

The Government’s Help to Buy mortgage scheme should not become permanent, the outgoing governor of the Bank of England has told Sky News.

Sir Mervyn King made the comments on the Murnaghan programme, and said he was “sure” there was no long-term place for a scheme like this.

Sir Mervyn said the UK should avoid a situation like that in the US where mortgages are government-guaranteed.

He made no indication as to when he thought the Help to Buy scheme should be wrapped up, but said it would depend on economic conditions.

The Treasury Select Committee made similar observations in its April review of the Chancellor’s Budget, in which the scheme was set out.

The report said: “Our concern is that, should the current scarcity of high loan-to-value mortgages reflect structural rather than cyclical factors, the pressure for Government to extend the scheme in three years time will be immense.

“The unintended and unwelcome outcome could well be that a scheme designed to deal with a supposedly temporary problem in the UK housing market becomes a permanent feature of the UK housing market.”

The Help to Buy scheme offers buyers the chance to purchase property with a deposit of 5% of the purchase price.

This was posted in Bdaily's Members' News section by Tom Keighley .