Housing stimulus will create another credit crisis
The boss of the property maintenance website said: “George Osborne should stop lending to people who can’t afford to buy houses.”
Osborne met with both mortgage lenders and house-builders yesterday to reveal more details of plans to underwrite £130bn of mortgage lending with state guarantees through the Help to Buy Scheme.
But following the meeting Davies has warned that the scheme could potentially lead to economic disaster.
He said: “We will face a similar problem where we lend to people without stable employment or an ability to pay back the mortgage which started the credit crisis in the first place.
“The other problem is that the scheme is artificially driving up house prices.
“We don’t need a government solution to provide more lending for a problem caused by lending.
“This scheme smacks of short termism and is an effort to vote win.
“There is no better solution than creating jobs and creating a workforce that actually wants to get off its backside and get into work.”
The mortgage guarantee is designed to support an increase in high loan-to-value mortgages for people who can’t afford large deposits and it also boost house-building.