The new scheme announced by George Osborne to help future home buyers to better attain affordable mortgages is coming under fierce scrutiny and critics are growing.  The Help to Buy scheme allows people buying new homes up to a value of £600,000 to borrow 20% of the value of a property interest-free for five years in return for the government taking a stake in the equity.  There is also a mortgage guarantee that will allow borrowers to get a mortgage without a large deposit.  The critics are warning that it will push house prices higher and will make it harder not easier for families to climb onto the property ladder.

The Office for Budget Responsibility (OBR) recently reported that the scheme is likely to fall short of its intended purpose.  Instead of helping buyers get affordable mortgages the scheme will push house prices upward and will inflate the housing market asking prices making properties out of reach of many buyers.

Speaking to the Treasury select committee, Professor Stephen Nickell, a member of the OBR, said, “The key is: is it just going to drive up house prices? By and large, in the short run the answer to that is yes. But in the medium term will the increased house prices stimulate more house building, and our general answer to that would probably be: a bit. But the historical evidence suggests not very much."

The housing market, which is critical to a healthy economy, is in need of a boost and most importantly aid to help first time buyers.  Another “in need” group are homeowners that are finding it difficult to secure a remortgage.