A Bloomberg News survey of 31 economists has shown a majority oppose the government's controversial Help to Buy scheme. Two thirds of the economists surveyed described the scheme as "bad."
The government intervention into the housing market will see taxpayers on the hook for 15 per cent of a home's value, the purpose of which is so banks will once again be willing to offer 95 per cent mortgages and provide a step up on to the housing ladder.
House prices have already been rising beyond the rate of inflation and wage growth at a rapid rate. The buoyant market saw RICS rising 14 points to 54 in September, the highest level since 2002. Such rapid increases will lead to further questioning of the value of the scheme.
The government says guarantees will amount to £12bn over the next three years. However economists warn that the policy is encouraging households to take on excessive debt and that without a dramatic increase in the supply of housing the effect of the policy simply be to drive up prices.
The shadow chancellor, Ed Balls, has described the scheme as "totally ill-thought through."
The rates for the scheme were unveiled on Tuesday with RBS announcing it would be offering two and five-year fixed rate contracts at 4.99 and 5.19 per cent respectively. Halifax will be offering a two-year fixed rate of 5.19 per cent.
Although critical of the Help to Buy initiative economists were optimistic about the overall future of the UK economy.They agree with the IMF that growth this year and next will be higher than previously forecast. GDP is expected to rise by 1.4 per cent this year and 1.9 per cent next year with the projection for 2015 rising to 2.4 per cent.