Industry reacts to Help to Buy introduction
The early launch of the scheme, which has been plagued by a lack of clarity, has led a number of industry experts to question the government’s judgment.
Angel Mas, president of Mortgage Insurance Europe at Genworth, said: “It is very surprising that the scheme is being launched without clarity on key points such as the fee and the way in which capital relief will work.
“Clear, predictable, up-front capital relief for lenders when they use the scheme is vital, otherwise lenders will have little incentive to participate.
“And this capital relief must be available to the private mortgage insurance market to create healthy competition with the government scheme.”
Ben Thompson, managing director of the Legal & General Mortgage Club, also expressed his surprise at the schemes early launch.
Thompson said: “There will of course be some surprise and even some scepticism with regard to this announcement and implementation being accelerated.
“Right now it remains unclear exactly what the scheme details and specifics are for lenders, and in that regard precisely who will participate.”
Recent weeks have seen the scheme berated by leading politicians and industry experts who have all expressed their fears about a potential house price bubble.
Just last week shadow chancellor Ed Balls and business secretary Vince Cable called for the scheme to be reviewed.
Mas also expressed his fears about a potential house price bubble. He said: “To protect the taxpayer from a house price bubble, it will also be essential for there to be adequate and ‘commercial’ pricing of the guarantee to protect the taxpayer from risk, for there to be vigilant monitoring of the scheme to ensure lending remains prudent, and for there to be an ‘exit strategy’ for when the scheme comes to an end.”
Thompson was less concerned about a house price bubble but did warn the government that it must address supply issues if the scheme is to boost the economy.
He said: “The government must not duck the issue of housing supply. If the UK had an appropriate supply and demand balance, arguably many of these mortgage and housing initiatives and stimuli would not be needed.
“This has to be the medium to long term aim. Being bold and more long term in outlook, and getting this strategy right, would allow more people to buy at a younger age than 38, would mean less dependence on parental help, controlled house price growth and of course with increased new construction, a boost to the economy.”
Nigel Stockton, financial services director, Countrywide, added: “Bubble…what bubble? Data from DCLG lays bare the lack of evidence for a “bubble” argument.
“Yes, London has high house price inflation; indeed it is distorting the overall HPI position as you need to look at the regions outside of London.
“As David Cameron said at the weekend when discussing the acceleration of Help to Buy Phase 2, talk to people in Manchester and Salford and they would laugh at the idea of a bubble.
“We should listen to people living around the country rather than draw conclusions from the South East alone and using these figures as the sole reference when talking about the whole of the UK residential property market.
“The acceleration of the Help to Buy Phase 2 is welcome for many across the UK who wish to buy or move home and any concerned individuals focussed on a bubble can take comfort from the fact that the FPC are ready to change key criteria if there are signs of overheating. “