Business Secretary Vince Cable has urged his government colleagues to reconsider the Help to Buy scheme.
The Liberal Democrat politician – who has already spoken out against the government guarantees for low-deposit mortgages – said yesterday that it was time for a fresh look at the policy.
A housing bubble caused the 2008 crash, and just a few months ago Mr Cable warned that London and Aberdeen face another bubble. Critics are also suggesting that these new loans are fuelling an artificial housing boom and expressed concerns about how it will be brought to an end.
Asked yesterday if the measure could be reassessed to stop another bubble, he replied: “Indeed. We certainly need to look at that again.
“It was conceived in very different circumstances.
“I notice, for example, that the ratings agency, Standard and Poor’s, which gives the UK a triple A rating, is expressing quite serious worries on that front.” House prices could rise by more than £28,000 in some parts of the north and north-east, according to the Office for Budget Responsibility.
The body – which provides impartial economic advice to the UK Government – is predicting that prices will rise by 5.2% next year, and by a further 7.2% in 2015.
That would add £26,828 and £28,180 to the average property in Aberdeen and Aberdeenshire respectively.
It would also boost prices by nearly £20,000 in Inverness and the Highlands, almost £18,000 in Moray and upwards of £12,600 in the northern and Western Isles.
The head of the UK’s financial services regulator said yesterday that it will take action if it feels the housing market is overheating. “We are watching the housing market very carefully,” Andrew Bailey said.
He said the central bank will use its powers to make sure a “free-for-all” in the mortgage market is avoided.
The regulator could force banks to hold more capital or ask for more stringent mortgage checks, he said.
Mr Bailey is the head of the Prudential Regulation Authority (PRA), which ensures the stability of financial services firms and is part of the Bank of England, where he is deputy governor.
“We’ve laid out the tools that we can use. That is hugely important – that we have set out our desire to see robust mortgage underwriting standards (and that) will be part of the approach,” he said.