Help to Buy solution
[Re: Help to Buy, yesterday]
As a former chairman and chief executive of Alliance & Leicester, I welcome the Help to Buy mortgage guarantee scheme. The decision to solicit the assistance of the Bank of England Financial Policy Committee recognises the need to manage the scheme’s potential risk – a task that the Bank is most adept at handling. But geographical Help to Buy pricing could fully support the government’s objective while preventing bubbles. A Help to Buy premium levied on the basis of local (for example, postcode area) house prices allows the benefits of the scheme to be targeted to locations where the housing market remains weak. Surely, a premium along those lines will be fairer than a one-size-fits-all policy. My current company has developed and tested the technology for pricing for risk on a geographical basis. It will enable the scheme to stimulate growth while safeguarding against bubbles, as any potential bubbles could be ring-fenced, preventing them from affecting other locations. And in less affluent areas where the market is sluggish, the premium could be lowered to stimulate the market. Finally, the involvement of the private sector at an early stage will make the government’s exit in the future seamless.
John Windeler, Quantum Alpha
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