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Banks wary of too much mortgage growth

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  • 13/01/2014
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Banks wary of too much mortgage growth
The new lease of life injected back into the mortgage market should be viewed with caution warned the Global Banking Outlook analysis of 50 banks, carried out by EY.

Referring to policy initiatives such as Help to Buy the report, Transforming Banks, said: “Many are wary of encouraging too much growth in this sector at a time when interest rates are at an all-time low.”

Help to Buy 2, the government-back mortgage guarantee scheme, has generated over £1bn of new home loans since it’s earlier-than-expected launch in October last year.

Warnings that the scheme will induce a housing bubble by creating unsustainable house price growth have been a regular debate featuring on the political and economic stages throughout 2013.

But David Ritchie, chief executive of house builders Bovis, believes the warnings to be dramatic.

In an interview with City AM this morning, he said the results of the second phase of Help to Buy are yet to be seen but he believed that fears over rising house prices were “overblown”.

He said: “The capital is such a microcosm. If you take London out of the house price numbers growth would be much, much lower.”

 

 

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