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David Cameron may amend Help to Buy scheme David Cameron may amend Help to Buy scheme
(about 2 hours later)
David Cameron has said he would be prepared to amend the government's Help to Buy scheme if the governor of the Bank of England, Mark Carney, recommends a change of approach. David Cameron has said he would be prepared to amend the government's Help to Buy scheme if the governor of the Bank of England were to recommend a change of approach.
The prime minister said he fully endorsed the governor's comments over the weekend in which Carney warned that rising house prices posed the biggest risk to Britain's economic recovery. The prime minister said he fully endorsed Mark Carney's comments over the weekend in which he warned that rising house prices posed the biggest risk to Britain's economic recovery.
Carney told Sky News on Sunday that he would remain "vigilant" on the Help to Buy scheme, in which prospective buyers are offered a loan of up to 20% on the price of a new home if they can provide a 5% deposit. The scheme initially applied only to newbuild homes and was later extended to all homes worth up to £600,000. Carney told Sky News on Sunday that he would remain vigilant on the Help to Buy scheme, in which prospective buyers are offered a loan of up to 20% on the price of a home if they can provide a 5% deposit. The scheme initially applied only to new homes but was later extended to all homes worth up to £600,000.
Asked whether the government would accept any changes recommended by Carney, who has been asked by the chancellor, George Osborne, to monitor the scheme, Cameron told BBC Radio 4's Today programme: "We will consider any changes that are proposed by Mark Carney. But as he said, this is a well-targeted scheme and it has helped tens of thousands of people to get on the housing ladder and have mortgages." Asked whether the government would accept any changes recommended by Carney, who the chancellor, George Osborne, has asked to monitor the scheme, Cameron told BBC Radio 4's Today programme: "We will consider any changes that are proposed by Mark Carney. But as he said, this is a well-targeted scheme and it has helped tens of thousands of people to get on the housing ladder and have mortgages."
Vince Cable, the business secretary, has said the second phase of the Help to Buy scheme is feeding demand in the housing market. Carney said Help to Buy was a "pretty targeted programme" that was relatively small. But he added: "It could grow a lot and it could change attitudes in other parts of the mortgage market – that's why we have to be vigilant." Vince Cable, the business secretary, has said the second phase of the Help to Buy scheme is feeding demand in the housing market. Carney said it was a "pretty targeted programme" that was relatively small, but he added: "It could grow a lot and it could change attitudes in other parts of the mortgage market. That's why we have to be vigilant."
Cameron said: "It is absolutely right that we are alert to any dangers and problems. This government hasn't just talked about that. We have actually given to the Bank of England and the financial policy committee the tools and the responsibility to call out any problems in our economy, any bubbles in our economy, and to act on them. And Mark Carney has all those powers at his disposal.Cameron said: "It is absolutely right that we are alert to any dangers and problems. This government hasn't just talked about that. We have actually given to the Bank of England and the financial policy committee the tools and the responsibility to call out any problems in our economy, any bubbles in our economy, and to act on them. And Mark Carney has all those powers at his disposal.
"We have specifically asked Mark Carney to examine Help to Buy and advise us if any changes are needed. We should be clear about what he said. He said it is a small and well-targeted scheme.""We have specifically asked Mark Carney to examine Help to Buy and advise us if any changes are needed. We should be clear about what he said. He said it is a small and well-targeted scheme."
The prime minister strongly defended the scheme, which was designed to help people who can afford a mortgage but not a hefty deposit. He said the average price of a property bought under the scheme was £160,000, and 85% of the purchases were outside London and the south-east. The prime minister strongly defended the scheme, which was designed to help people who can afford a mortgage but not a hefty deposit. He said the average price of a property bought under it was £160,000, and that 85% of the purchases were outside London and the south-east.
"We put in a place a scheme that was simple, that could get going quickly, that could make a difference to young people and others wanting to get on the housing ladder who could afford mortgage payments," Cameron said."We put in a place a scheme that was simple, that could get going quickly, that could make a difference to young people and others wanting to get on the housing ladder who could afford mortgage payments," Cameron said.
Carney said he would publish any advice he offered to the chancellor on changing Help to Buy, which he described pointedly as a "government policy". The Bank governor, who stopped the subsidising of mortgages through the Funding for Lending scheme last year, is examining whether to introduce tests to determine whether people applying for mortgages could afford their repayments if interest rates rise. He could also intervene to limit mortgages with high loan-to-value ratios. Carney said he would publish any advice he offered to the chancellor on changing Help to Buy, which he described pointedly as a government policy. The Bank governor, who stopped the subsidising of mortgages through the Funding for Lending scheme last year, is examining whether to introduce tests to determine whether people applying for mortgages could afford their repayments if interest rates rise. He could also intervene to limit mortgages with high loan-to-value ratios.