The Bank of England has once again shown its support for chancellor George Osborne’s Help to Buy scheme, saying that the Financial Policy Committee (FPC) believes that the flagship scheme is not risking the financial stability of the housing market as some claim.
Many people and experts from all sorts of background have given an opinion on the scheme, most notably that it is likely to cause a housing bubble and cause huge amounts of damage to the property market, first by making houses unaffordable, and then have the prices crash, similar to what happened at the beginning of the financial crisis.
However, the Bank of England, who are arguably the most expert in the field of the British economy, have said that they do not believe the Help to Buy scheme can affect the market in a dangerous way.
The example given to prove this is that the scheme has had a relatively low up-take in London where the main house price increase has occurred. Apparently house prices in London are roughly 21% over what they were this time last year, whereas in places such as the north of England, prices are just 4.3% higher, despite having a higher rate of Help to Buy mortgages.
“There has been strong house price growth in some regions but, in the committee’s judgement, the scheme does not appear to have been a material driver of that growth,” Mark Carney, governor of the Bank of England reportedly summed up.
The FCP also announced they will be willing to take on any necessary powers to ensure that there will not be another boom and bust in the property market, following a request from the Chancellor.