Barclays signs up to Help to Buy

11th Oct 2013 15:46

Barclays on Friday said it has signed up to the UK government's Help to Buy mortgage scheme. It leaves customer-owned Nationwide as the only major lender that is yet to sign up to the programme, which provides aid to aspiring home buyers.Details of when Barclays will launch offers under the scheme and what types of loans will be covered are still in progress.Prime Minister David Cameron earlier this week launched the second phase of the scheme, which allows people to pay a down payment of as little as 5%.While the government has hailed the programme as a boost to the property market, critics have said all it has done is increase prices and risk creating a housing bubble, where artificial demand outpaces supply. A Bloomberg News survey published today showed two-thirds of 31 economists described the measure as "bad", and only 10 said it was a "good" policy.International Monetary Fund director José Viñals yesterday also warned: "One needs to be careful that if there is no supply responses that this may exacerbate the increase of house prices in the UK."I think this needs to be look at [and] may require measures beyond the programme such as alleviating planning constraints or tax incentives to further new housing construction."Royal Bank of Scotland, Lloyds, HSBC and Santander UK have already signed up for the Help to Buy scheme.The lenders can choose to participate in three loan-to-value bands, but must then put all eligible loans they originate into the scheme.Under the programme, buyers must pass strict affordability and stress tests, meaning many applicants may be turned away.RD