LONDON (Reuters) - Over 6,000 people have applied for mortgages under the British government’s Help to Buy scheme in its first three months, which if approved would amount to 910 million pounds in loans, Prime Minister David Cameron announced on Thursday.
Presented by the government as a bold policy to help aspiring home-owners gain a foothold on the property ladder while stimulating house-building, the scheme has raised concerns among critics that it could fuel a property bubble.
“In less than three months, the scheme has already helped thousands of people. I want to see that continue in 2014 and for Help to Buy to help thousands more realise their dream of home ownership,” Cameron said in a statement.
British lenders provided 45,044 mortgages for home purchases in November, more than in any month since December 2009, data from the British Bankers Association showed last week.
The Bank of England, which collects fuller data about the British mortgage market, said in November that lenders had approved 67,701 mortgages in October, a six-year high, although still below the pre-crisis average of about 90,000.
The Bank in November unexpectedly said it was ending its own incentives for banks to provide mortgages as part of the separate Funding for Lending scheme, which would instead focus exclusively on lending to businesses.
Bank Governor Mark Carney warned in December that Britain’s housing market had a history of moving “from stall speed to warp speed”, and one of the BoE’s biggest challenges is keeping prices under control without holding back the rest of the economy.
The Bank and economists have also been concerned that the recovery relies too heavily on household consumption.
Data last month showed UK house prices rose 5.5 percent in the year to October, with London prices 12 percent higher.
Cameron and Chancellor George Osborne, both from the Conservative Party which leads the coalition government, have dismissed concerns about Help to Buy, which they say helps people with sufficient incomes to meet monthly repayments but who cannot afford the hefty deposits demanded by banks.
But Business Secretary Vince Cable, of junior coalition partner the Lib Dems, said last week the government should review the scheme in light of changing circumstances since it was conceived.
Cable spoke of a boom in house prices which he warned risk making large parts of London affordable only for wealthy foreigners and bankers.
Barclays and Santander banks are expected to launch mortgage products supported by Help to Buy later this month, joining RBS and the Halifax unit of the Lloyds Banking Group that have been involved since the start, and other participating retail banks.
Reporting by Estelle Shirbon; Editing by Catherine Evans