The housing market had begun picking up steam even before the government rushed forward the next stage of its Help to Buy scheme, Bank of England figures showed yesterday.
In August, when lenders still believed that the latest set of mortgage guarantees would not be available until January, the number of mortgages approved rose to 62,226, the highest since February 2008. The second part of the scheme will now start within a week.
Many commentators have been critical of Help to Buy, suggesting that it will inflate prices without increasing the supply of housing.
The Centre for Economics and Business Research also released forecasts yesterday, predicting a 2.9 per cent increase in house prices this year, well above wages.
As chancellor George Osborne reiterated the government’s commitment to starting the scheme early in his speech yesterday, Mark Littlewood, director of the Institute for Economic Affairs, called for a rethink: “Rather than the dangerous Help to Buy scheme, the government should be focusing on why the cost of housing is so high in the first place.”
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