A credit agency has added its voice to the concerns that Help to Buy could be causing a housing bubble.

Credit rating agency Fitch argued that a combination of low interest rates and the Help to Buy scheme has created an increase in demand for houses, which is not being met by the current supply, according to Mortgage Strategy. 

This has led to a surge in house prices – particularly in London and the south-east, where Fitch claims the greatest rise has taken place, relative to income.

Fitch is anticipating an increase in interest rates before the end of 2015, particularly in light of the government’s recent announcement that the unemployment rate fell to 7.1 per cent yesterday (January 22nd). The Bank of England has pledged to not raise rates until the figure drops below seven per cent. 

A spokesperson from Fitch warns this may not only impact house prices by limiting demand, but could also have a negative effect on borrower affordability. 

“If a rate rise comes as we expect before the end of 2015, variable-rate mortgage borrowers could be faced with an unmanageable increase in their monthly mortgage payments,” he commented.