You are here: Home - Mortgages -

Bank of England could scale down Help to Buy in 2014 – economist

0
Written by:
06/12/2013
The Bank of England is likely to scale down support for the housing market including Help to Buy in order to prevent another housing bubble, an economist has suggested.

According to Berenberg Bank chief UK economist Rob Wood, the central bank prefers to use specific measures focused on the housing market rather than the “blunt tool” of raising interest rates.

He welcomed the central bank’s decision to redirect the Funding for Lending Scheme away from mortgages: “That BoE action is likely to be the first in a series of measures over the next year, perhaps culminating in scaling down the Help-to-Buy scheme next September. We would like to see that scheme cancelled immediately, but the politics prevent that.”

The central bank has as little interest in causing a housing crash as it does in blowing up a housing bubble, he added, and any changes are likely to be gradual.

Announcing the end of Funding for Lending for mortgage lending last week, the Bank of England governor Mark Carney stressed the central bank has a number of financial tools at its disposal which it will use if banks begin lending recklessly.

More than a third of Brits expect interest rates will rise over the next 12 months, a Bank of England poll revealed today.

However, 43% believed interest rates will stay about the same – the second highest proportion since the survey began in 1999. Two-fifths of respondents said a constant rate would be best for the economy, while 18% believed interest rates should go down.

But Wood argued using interest rates to redirect lending was “off the cards”. He said: “They are willing to act, but with surgical measures focused on the housing market specifically rather than the blunt tool of using interest rates.”

Tag Box

There are 0 Comment(s)

If you wish to comment without signing in, click your cursor in the top box and tick the 'Sign in as a guest' box at the bottom.

Seven ways to get help with energy bills this winter

We knew today’s announcement was going to be painful, but it’s still a shock to the system. When this kick...

Flight cancelled or delayed? Your rights explained

With no sign of the problems in UK aviation easing over the peak summer period, many will worry whether holida...

Rail strikes: Your travel and refund rights

Thousands of railway workers will strike across three days this week, grinding much of the transport system to...

What will happen if rates change

How your finances will be impacted by a rise in interest rates.

Regular Savings Calculator

Small regular contributions can build up nicely over time.

Online Savings Calculator

Work out how your online savings can build over time.

DIY investors: 10 common mistakes to avoid

For those without the help and experience of an adviser, here are 10 common DIY investor mistakes to avoid.

Mortgage down-valuations: Tips to avoid pulling out of a house sale

Down-valuations are on the rise. So, what does it mean for home buyers, and what can you do?

Five tips for surviving a bear market mauling

The S&P 500 has slipped into bear market territory and for UK investors, the FTSE 250 is also on the edge. Her...

Money Tips of the Week