Its position closely mirrors that of outgoing Bank of England governor Mervyn King, who warned at the weekend the government scheme could easily become a permanent one.
CML director general Paul Smee told lenders at a Welsh lunch hosted by the lenders’ body there was a need for an “exit path” from Help to Buy. He continued:”Schemes which end in a cliff edge distort the market and tend to create a bubble on one side and a desert on the other.”
The government should make creditworthy borrowers central to any definition of Help to Buy success, he added: “There is no point with one hand affirming a belief in the maintenance of high lending standards and with the other imposing targets requiring a laxer attitude to be taken.”
King told Sky News the way Help to Buy was “too close for comfort” to the US model of a government-guaranteed mortgage market.
He said: “I’m sure that there is no place in the long run for a scheme of this kind. This scheme is a little too close for comfort to a general scheme to guarantee mortgages. We had a very healthy mortgage market with competing lenders attracting borrowers before the crisis, and we need to get back to that healthy mortgage market.”
Since Help to Buy was announced in the March Budget, the lenders’ body has been lukewarm in its response. In March, it called for greater clarity from the government on the scope and ambitions of its flagship Help to Buy scheme.
And last month, it warned lenders were struggling to prepare for Help to Buy on top of meeting new regulatory requirements introduced in the upcoming Mortgage Market Review.
