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Vince Cable outlines fears over Help to Buy price bubble

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29/07/2013
Business secretary Vince Cable has issued a warning to his own government over the prospect of a Help to Buy-backed property bubble.
Vince Cable outlines fears over Help to Buy price bubble

Cable, speaking to the BBC’s Andrew Marr Show, said that he was ‘worried’ that the mortgage guarantee phase of the Help to Buy scheme would cause a house price boom.

“I am worried about the danger of getting into another housing bubble,” he said.

“The Help to Buy scheme is actually quite complex. We have one part that’s already operating, which is providing mortgages against new homes, nobody has questioned that.

“The proposal which hasn’t yet been implemented, which is providing a guarantee for a limited range of mortgages, could be a problem. It could inflate the market.”

Driven by Chancellor George Osborne, the Help to Buy scheme has come under fire from former Bank of England governor Mervyn King and described as a ‘political coup’ by analysts.

Banks and building societies met with Osborne last week but key elements of the scheme, such as the fee the government will charge lenders to take part, remain undecided.

“If it’s properly designed, it could be a useful addition,” said Cable. “The Canadians, for example, have a guarantee scheme for the insurance that underlies the mortgage market, and it’s stabilised it.

“But we mustn’t risk returning to the problems of the last decade when housing got out of control.”

Cable later described the housing supply in the country as ‘hopelessly inadequate’ and highlighted a need for more social housing.

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