Cameron Says Help-to-Buy Will Fix Broken U.K. Mortgage MarketSvenja O’Donnell
U.K. Prime Minister David Cameron defended his decision to bring forward the Help-to-Buy program by three months, saying there were “very robust” controls in place to prevent a housing bubble.
“The mortgage market today isn’t working,” Cameron said in a BBC Radio 4 interview in Manchester, England. “There’s a market failure going on which the government is helping correct.”
Cameron this week said he would bring forward the second phase of the plan, which allows people to buy a home costing as much as 600,000 pounds ($971,000) with a 5 percent deposit. The program had already drawn warnings from the International Monetary Fund and U.K. Business Secretary Vince Cable that it could over-inflate house prices, prompting the government to announce the Bank of England will review it on an annual basis.
“The controls in place with the Bank of England are very, very robust,” Cameron said today. The current system only allows people to buy homes if they have rich parents and that “is simply not fair,” he said.
The first phase, interest-free loans for buyers of newly built homes, began in April and has already contributed to the strongest housing market since the financial crisis. The second phase, which extends to all homes, was initially due to start in January. A report by London-based property researcher Hometrack showed yesterday that U.K. house prices increased the most since May 2007.