Chancellor George Osborne says Help to Buy is boosting competition on high loan-to-value mortgages as he defended the scheme against accusations it was fuelling a boom.
Speaking to the Treasury select committee this morning, Osborne said Help to Buy has boosted 95 per cent LTV deals across the board, and not just via lenders who signed up to the scheme.
Recent Moneyfacts data, compiled for Money Marketing, showed a number of building societies offered cheaper 95 per cent deals than those available through Help to Buy.
Osborne says: “One of the encouraging signs of Help to Buy is, not only is it reaching those outside London and the south-east on lower than average house purchases, but also it is stimulating the re-emergence of high LTV products. Some are on the market without Help to Buy but the Help to Buy guarantee has created space where those products can sit.”
TSC chair Andrew Tyrie accused Osborne of “adding vodka to the punchbowl just as the party gets going” by bringing in Help to Buy, and questioned whether there is an exit strategy.
Osborne said: “We have the Financial Policy Committee which has the power to take away the punchbowl. It has powers to look at overall debt levels in the housing market and more broadly.
“I have been pretty clear the scheme will end after three years.”
The FPC has the power to review Help to Buy at any time with a formal review once a year starting next September.
Osborne said the FPC did have an effective “veto” over Help to Buy as he confirmed he would almost certainly implement its advice on financial stability.
In a wide-ranging session examining last week’s Autumn Statement Osborne also revealed the 2014 Budget will take place on 19 March.
He also said he hopes to cut billions of pounds more in welfare spending if still in Government after 2015.
Last week the Institute of Fiscal Studies said £12bn of welfare savings would need to be made after 2015 to protect other departmental budgets.