Help to Buy mortgages could damage UK economy, warns ratings agency
I’m with the credit rating agency on analysis of this well intentioned policy fraught with unintended consequences. Lets hope I am wrong. It would be great to see some more affordable housing in rural areas. The story goes:
Fitch Ratings has become the latest critic of the government’s Help to Buy housing scheme, arguing it is likely to boost profits for builders and banks but damage the UK economy.
The ratings agency said the second phase of the scheme – which will see the government guarantee mortgages on homes bought for up to £600,000 from January next year – would probably push up prices and increase taxpayer liabilities without helping to alleviate Britain’s chronic housing shortage.
The first part of the scheme has already been providing loans for buyers of new build homes since April.
“The scheme, along with the initial phase that began in April, could have an impact on sovereign gross debt and its dynamics, particularly if there is strong pent-up demand as the tighter loan-to-value ratios that have prevailed since 2008 are relaxed,” Fitch said.
“For housebuilders the main benefit from the second phase of the scheme will come from rising house prices, rather than increased volumes.”