David Cameron announces second stage will be introduced next week and dismisses fears of a housing bubble
State-backed mortgages to help increase home ownership will be introduced next week – three months earlier than planned, David Cameron has revealed.
Despite widespread concern that the second stage of the Help to Buy scheme could spark a housing bubble, the prime minister is forging ahead insisting the "earlier the better" to introduce assistance for buyers.
The mortgage guarantees will allow buyers to acquire a newly built home or an existing property worth up to £600,000 with a deposit of only 5%.
Cameron told the Sun: "I am impatient to help young people get on the housing ladder.
"The need is now. I have always wanted this to come in and frankly the earlier the better.
"What concerns me is that you can't buy a house or a flat even if you are doing okay, you have got decent job prospects and good earnings.
"I am not prepared to be a prime minister of a country with caps on aspiration."
The scheme aims to boost mortgage availability by reducing the risk for lenders because the government takes on the risk of default when it guarantees a proportion of a loan.
It will see the state offer guarantees totalling up to £12bn on £130bn of high loan-to-value mortgage lending.
Cameron believes that will help solve the skewed market that means people on good wages struggle to buy even modest properties because they cannot scrape together the massive deposits needed or find a mortgage.
Many properties are not available to potential buyers because they "don't have rich parents", he said on the eve of the Conservative party conference in Manchester.
A number of high profile figures have warned that it could lead to more problems than it solves.
The Liberal Democrat business secretary, Vince Cable, warned the scheme "could inflate the market" and said he feared there was a "danger of getting into another housing bubble".
Former Bank of England governor Lord King warned that the scheme is "too close for comfort" to a general scheme to guarantee mortgages.
Cameron dismissed concerns, telling The Sun that people outside the M25 "laugh, quite rightly, in your face" at the suggestion there is a housing boom.
He said: "Look at the number of first time buyers - it is still almost half what it was before the difficulties that we faced.
"The number of mortgage approvals is still way below where it was."
He added: "Don't take it from me, take it from the Bank of England who looked at this last week and said there isn't one".
The first stage of Help to Buy was launched in April and offers loans to give people the chance to buy a new-build home with a deposit of just 5%. The scheme has been credited with spurring a surge in home sales and driving up prices.
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