Cameron Says U.K. Open to Lowering Help-to-Buy Cap If BOE UrgesSvenja O’Donnell
U.K. Prime Minister David Cameron said his government will consider lowering the cap on its Help to Buy mortgage-support program if recommended by Bank of England Governor Mark Carney.
Cameron, speaking on BBC Radio 4, defended the program, which allows people to buy a home valued at as much as 600,000 pounds ($1 million) with a 5 percent deposit, saying it is “well-targeted” and mainly helping people outside London.
“We would consider any changes that are proposed by Mark Carney,” Cameron said. “We’re alert to any dangers and problems. We’ve given to the BOE and the Financial Policy Committee the tools and responsibility to call out any bubbles in our economy and act on them.”
Cameron’s comments come days after Carney warned housing poses the biggest risk to Britain’s economy as Help to Buy, set up by Chancellor of the Exchequer George Osborne, faces renewed criticism that it is fueling a boom in the market. Recent reports show house prices have risen to record highs, led by gains in London and encouraged by a strengthening recovery and low interest rates as well as the government program.
The prime minister said data show the average property price of a home bought under Help to Buy was about 160,000 pounds, and 85 percent of the purchases were outside London.
“We put in place a scheme that was simple, that could get going quickly, that could make a difference to young people,” he said. “This is a well-targeted scheme and it’s helped tens of thousands of people to get on the housing ladder and to have mortgages.”
Carney said in a May 18 interview with Sky News that policy makers “could do more” to tackle excesses if needed. Options include imposing more checks on the affordability of mortgages, limiting types of loans and advising the government to rein in its stimulus program.
Cameron said Carney is doing “an excellent job at the BOE.”
“The economy is recovering, we’re creating jobs,” the prime minister said. “I want to see more people buy and own their homes, it is a very natural instinct. That’s what the help to buy scheme is all about.”