You are here: Home - News -

Govt must introduce Help to Buy taper within three years – Smee

by:
  • 17/12/2013
  • 0
Govt must introduce Help to Buy taper within three years – Smee
The government must outline how it will wind down the Help to Buy schemes soon in order to ensure the housing market “does not fall off a cliff”, the Council of Mortgage Lenders director general has warned.

Paul Smee agreed with MPs on the Treasury Select Committee that the Help to Buy schemes could end in a “cliff edge”. He said: “That is entirely a risk and that is why I have been talking for some time about an exit strategy that avoids that cliff.”

He said the Help to Buy mortgage guarantee scheme “had good features” but continued: “I would be very concerned if it went on beyond its three-year lifespan. I would like there to be a decision on how it was tapered soon.

“The taper should be determined soon. I am not saying when it should start, but before three years, so the scheme can close after three years.”

Tactics to reduce lender use of the scheme could including lowering the loan-to-value ratio, increasing the fee lenders must pay to benefit from the guarantee scheme and reducing the maximum loan size, he suggested.

Smee also backed Bank of England financial stability head Andy Haldane’s call for the return of securitisation.

He told MPs it was US rather than British securitisations that contributed to the financial crisis: “Most of the securitisations that came out here delivered on what was intended.”

The level of scrutiny from investors, as well as the high quality of lenders will keep standards high, he added.

Quizzed on the prospect of rising interest rates, Smee said stress testing will help avoid shocks to Help to Buy borrowers, while continued demand for private rental accommodation will help buy-to-let landlords cover their repayments.

However, he acknowledged an increase could lead to a rise in defaults: “Mathematically that is probably the case.”

Related Posts

Tags

There are 0 Comment(s)

You may also be interested in