‘Help to Buy’ will inflate a bubble

House prices are on the rise again in Britain as the effects of the government's 'Help to Buy' scheme are felt.

The second phase of the government's Help to Buy' (HTB) scheme was launched this week. As of January 2014, the government will offer £12bn of mortgage guarantees to spur lenders to offer housing loans to people with low deposits. It believes it can thus support £130bn of mortgages where a deposit of as little as 5% is needed. This scheme is available for both newbuild and existing houses. The other option under HTB, available since April, is a government interest-free loan worth 20% of the property's value, designed to top up a 5% deposit. This only applies to newbuilds.

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