Morning Call: pick of the papers

The ten must-read comment pieces from this morning's papers.

1.This is ghettoisation by government decree (The Independent)

Social exclusion will only get worse if workers are denied public housing in nice parts of our towns, writes Joan Smith.

2. Spare a thought for the pupils who are destined only for failure (The Telegraph)

Politicians of all sides must share the blame for a system that leaves one in five without a job, writes Mary Riddell.

3. Assange will end up in Sweden – and quite right too (The Financial Times)

For all his highfalutin rhetoric, Julian Assange is no poster child for extradition reform – and Ecuador is no haven for free speech, writes Dominic Raab.

4. Fixing Britain's work ethic is not the answer to this economic mess (The Guardian)

It suits the Tory austerity narrative to blame 'idle' Britons for the recession rather than flaws in the modern labour market, writes Gaby Hinsliff.

5. George Galloway is anything but gorgeous (The Independent)

George Galloway is no stranger to opprobrium, but his remarks in support of Julian Assange represent a new low even for him, writes The Independent.

6. Julian Assange threatens to make the EU look good (The Telegraph)

The case against Europe’s extradition system is being hurt by the WikiLeaks founder's dissembling, writes Philip Johnston.

7. The housing crisis: a nightmare caused by our sanctified suburban dreams (The Guardian)

Freeing up 1% of the green belt could provide 300,000 homes. Time to lose our myopic nostalgia and send in the bulldozers, writes Ian Birrell

8. The critics carped but audiences loved Scott's action-packed movies (The Independent)

Even his detractors agree he was very slick. His technical mastery was never in doubt, writes Geoffrey Macnab

9. The able-bodied must face their anxiety about disability (The Guardian)

Humans are innately wary of difference, but events like the Paralympics can help the able-bodied to look past disability, writes Philippa Perry.

10. MPs must update our laws on life and death (The Independent)

Judges seem to recognise that the law as it stands is out of step with public opinion, writes The Independent.

 

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I was wrong about Help to Buy - but I'm still glad it's gone

As a mortgage journalist in 2013, I was deeply sceptical of the guarantee scheme. 

If you just read the headlines about Help to Buy, you could be under the impression that Theresa May has just axed an important scheme for first-time buyers. If you're on the left, you might conclude that she is on a mission to make life worse for ordinary working people. If you just enjoy blue-on-blue action, it's a swipe at the Chancellor she sacked, George Osborne.

Except it's none of those things. Help to Buy mortgage guarantee scheme is a policy that actually worked pretty well - despite the concerns of financial journalists including me - and has served its purpose.

When Osborne first announced Help to Buy in 2013, it was controversial. Mortgage journalists, such as I was at the time, were still mopping up news from the financial crisis. We were still writing up reports about the toxic loan books that had brought the banks crashing down. The idea of the Government promising to bail out mortgage borrowers seemed the height of recklessness.

But the Government always intended Help to Buy mortgage guarantee to act as a stimulus, not a long-term solution. From the beginning, it had an end date - 31 December 2016. The idea was to encourage big banks to start lending again.

So far, the record of Help to Buy has been pretty good. A first-time buyer in 2013 with a 5 per cent deposit had 56 mortgage products to choose from - not much when you consider some of those products would have been ridiculously expensive or would come with many strings attached. By 2016, according to Moneyfacts, first-time buyers had 271 products to choose from, nearly a five-fold increase

Over the same period, financial regulators have introduced much tougher mortgage affordability rules. First-time buyers can be expected to be interrogated about their income, their little luxuries and how they would cope if interest rates rose (contrary to our expectations in 2013, the Bank of England base rate has actually fallen). 

A criticism that still rings true, however, is that the mortgage guarantee scheme only helps boost demand for properties, while doing nothing about the lack of housing supply. Unlike its sister scheme, the Help to Buy equity loan scheme, there is no incentive for property companies to build more homes. According to FullFact, there were just 112,000 homes being built in England and Wales in 2010. By 2015, that had increased, but only to a mere 149,000.

This lack of supply helps to prop up house prices - one of the factors making it so difficult to get on the housing ladder in the first place. In July, the average house price in England was £233,000. This means a first-time buyer with a 5 per cent deposit of £11,650 would still need to be earning nearly £50,000 to meet most mortgage affordability criteria. In other words, the Help to Buy mortgage guarantee is targeted squarely at the middle class.

The Government plans to maintain the Help to Buy equity loan scheme, which is restricted to new builds, and the Help to Buy ISA, which rewards savers at a time of low interest rates. As for Help to Buy mortgage guarantee, the scheme may be dead, but so long as high street banks are offering 95 per cent mortgages, its effects are still with us.