81 MPs call for Help to Buy exit strategy

From Money Marketing Feb 2014

Some 81 MPs have called on the Government to outline its exit strategy for the Help to Buy mortgage guarantee scheme to ensure it ends in 2017 as planned.

In a survey of 100 MPs commissioned by mortgage insurance provider Genworth, seven out of 10 believe Help to Buy will increase house prices, although 54 per cent thought it would bring about more homes being built.

Some 72 per cent of MPs expressed concerns over the impact on the taxpayer if the £12bn Government guarantee was significantly called.

While 51 of the 100 MPs surveyed fear the scheme could become permanent, 52 per cent believe private sector mortgage insurance providers can help facilitate an exit from the Government initiative.

Genworth mortgage insurance Europe president Angel Mas says: “With an eye to the near future, it’s clear that the Government should start thinking about the exit strategy for the scheme now. Just turning off the high loan to value mortgage finance tap at the end of 2016 will risk a cliff since the issues that led to the introduction of Help to Buy 1 and 2 have not gone away.

“There is consensus that the scheme should not be permanent, and over half of MPs see a potential role for the private insurance sector in replacing the Government and minimising risk to the taxpayer. We believe that private involvement should be gradual and phased in through the life of the current Government scheme.”

Help to Buy was the Government’s flagship policy in March’s Budget announcement.

It comprises two parts: a £3.5bn shared equity scheme available on new-builds and a mortgage guarantee scheme, which was first revealed by Mortgage Strategy last year, capable of supporting up to £130bn of mortgage lending.