Morning Call: pick of the papers

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

1. Cameron’s incurable European headache (Financial Times)

This is where the irresistible force of rising Tory europhobia meets the immovable object of geopolitical reality, writes Philip Stephens.

2. It’s too early for the Tories to assume defeat is inevitable in 2015 (Daily Telegraph)

David Cameron could be a transformative leader if he had more faith in his power to change minds, says Fraser Nelson.

3. Algeria spills more blood (Guardian)

The violent end to this standoff is only the start of a new chapter in the country's savage history, writes Nabila Ramdani.

4. Don’t reject a referendum, Ed. Fast-track it (Times) (£)

The Labour leader should seize his chance to appeal to British business and voters, says Philip Collins. He must offer an in-out vote now.

5. Mali is not a global conflict. It doesn't require a global response (Independent)

The notion of a global threat from a revived al-Qa'ida should be familiar by now; it's the same flawed reasoning the led the US to launch its "war against terror", says Adrian Hamilton.

6. A living wage, or a much higher minimum wage, is worth paying (Daily Telegraph)

As City profits soar, the low-skilled, service areas of the economy continue to suffer a fall in income, writes Jeremy Warner. Radical action might avoid a social catastrophe.

7. A funny way of firing up the locomotive (Financial Times)

Now and in the interwar period, austerity policies have often failed in their own terms as they have made deficits worse, writes Samuel Brittan.

8. Mr Cameron and the speech that never was (Daily Mail)

The Prime Minister is confronting one of the most crucial issues of our times while Ed Miliband has nothing useful to say, argues a Daily Mail editorial.

9. Hugh Gaitskell: New Labour's old roots (Guardian)

Tony Blair never acknowledged the influence of his most like-minded predecessor, who died 50 years ago this week, says a Guardian editorial.

10. Why today’s American presidents need a third term (Independent)

There are compelling reasons why two four-year terms may not be enough for a competent and popular US president today, writes Mary Dejevsky.

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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.