The Treasury Select Committee (TSC) said “great care will need to be taken” in how the scheme is run.
Banks have today begun to unveil mortgages which they will offer under the expanded Help to Buy scheme.
RBS, NatWest and Halifax will start taking applications this week and Virgin Money will join from January.
But TSC chairman Andrew Tyrie said it is vital ministers closely scrutinise the scheme’s impact.
“Given the chequered history of government interventions in residential property, great care will need to be taken in both the construction and running of this scheme,” Tyrie (pictured) warned. “Mistakes could distort the housing market or carry threats to financial stability.”
The TSC said the Bank of England must be allowed to put the brakes on Help to Buy at any time if it threatens to cause a housing bubble, rather than being subject to a review once a year. The MPs said they were concerned that the primary effect of the scheme “could be to raise house prices rather than to stimulate new supply”.
The government’s initiative is designed to enable buyers who can afford only small deposits to buy a home. The Prime Minister David Cameron said it would help thousands of people to “put down roots and raise a family”.