The Minister for Housing, Kris Hopkins has hit back at criticism that the Help to Buy mortgage guarantee scheme is driving up prices, making them unaffordable for many.
The Intermediary Mortgage Lenders Association (IMLA) released a report claiming that a large number of brokers and lenders believe that the second element of the government’s Help to Buy scheme, which allows borrowers to take out 95 per cent mortgages, will end earlier than intended as it is leading to an unprecedented increase in house prices, which could cause a bubble.
However, speaking at a debate in the capital on alternatives to the ‘bank of mum & dad’, Hopkins insisted that it was not the scheme that is driving prices up but a lack of supply.
“Help to buy is not responsible for the increase in house prices as, while it is assisting many to get a mortgage, it will represent just 2 per cent of 3.4 million housing transactions in the duration of the scheme”, he told a room of industry representatives at the debate.
He added that of those who have utilised the scheme to date, only 7 per cent were in London, where the house price rises is most seen.
Meanwhile, Katherine Peacock, managing director of market research agency, ComRes, told the audience that a study found that the majority of 18 to 34 year olds felt they would never own a home, despite believing it was their right to do so.
The option of shared ownership was mooted as a solution to the house buying difficulties faced by many and it was suggested that the product needed more positive publicity to encourage public interest.
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