Morning Call: pick of the papers

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

1. Our response to the pensions challenge is still locked in its infancy (Daily Telegraph)

Ed Balls has won praise for addressing Britain’s old age problem, but he must go further, says Mary Riddell. 

2. Labour’s great surrender on public spending (Times)

By accepting Osborne’s spending plans it’s clear that all the main parties will have to make dramatic cuts, writes Daniel Finkelstein. 

3. The overstated inflation danger (Financial Times)

A high rate may be a risk in the very long run – but right now the risk is that it may be too low, writes Martin Wolf.

4. To combat tax avoidance, tough talk is not enough (Guardian)

David Cameron must deliver a concrete plan of action at the G8 summit, says Margaret Hodge. It's a crucial test of his leadership.

5. Erdogan’s focus should be his own party (Financial Times)

The real action will now take place in the Turkish prime minister’s AKP, writes David Gardner.

6. NSA surveillance: The US is behaving like China (Guardian)

Both governments think they are doing what is best for the state and people, says Ai Weiwei. But, as I know, such abuse of power can ruin lives.

7. Thames Water avoiding tax is the final insult (Daily Mail)

These firms have exploited Britain’s soft-touch regulation, and the fear of successive governments of intervening to protect consumers, writes Alex Brummer. 

8. Once again, the nationalists decide independence is all about sharing (Daily Telegraph)

Picking and choosing on pensions shows the SNP's determination to pretend breaking up Britain would be pain free, says Alan Cochrane. 

9. Time for a rethink on GM crops (Independent)

The dire prophecies of Frankenstein foods have not come to pass, says an Independent editorial. 

10. Tax cutters should welcome a bit of state intervention (Times)

Social breakdown drives much of the growth in spending, writes Ruth Porter. 

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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.