Bank of England to monitor Help to Buy

Sam Cordon

September 27, 2013

Since the launch of the scheme there has been speculation that it has the potential to create a house price “bubble”.

From January, the scheme will provide mortgage guarantees on properties worth up to £600,000 but the Bank’s financial policy committee will make annual reviews to ensure the scheme isn’t causing the market to overheat. Initially it was due to assess the scheme after three years.

The FPC will also be able to modify parts of the scheme to keep it in check. Speculation is already mounting that the FPC could reduce the schemes £600,000 cap.

The FPC’s involvement has been welcomed by the industry with the Council of Mortgage Lenders saying its involvement will help create a predictable environment for lenders.

Paul Smee, director general of the CML, said: “Lenders need a predictable operating environment to participate effectively in the Help to Buy scheme.

“The various pieces of information that lenders need to understand if they are to participate are steadily becoming clearer, and we anticipate that the government will publish the detailed scheme rules soon.

“We now have an indication of how and when the Bank of England will determine whether the scheme needs to change during its three year proposed lifespan, and this annual review will be a key deciding factor in that.

“We hope that there will also soon be clarity on issues such as the government’s exit strategy at the end of the scheme.”

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