A few days ago, the European Union was making suggestions to the UK about how to prevent a housing bubble. Well, now it seems that the International Monetary Fund (IMF) is offering their thoughts on the matter, too.

IMF’s annual report on the state of the local economy highlights the continuing signs of house price growth, particularly in the capital, which are becoming more widespread and pose a threat to its economic potential. It warned that the accelerating house prices could make households more vulnerable to income and interest rate shocks and hinted at indications of a “credit-led bubble”.

In order to avoid this scenario, the IMF believes that the country should introduce a limit on the volume of high-loan-to-income mortgages which lenders can provide to home buyers.

The Fund also suggests that the government should consider modifying or even stopping the Help to Buy scheme before the predicted terms if house prices keep spiralling. The scheme, which offers mortgage guarantees and loans for people struggling to raise a deposit, allows creditworthy lower-income individuals to buy homes, particularly outside the capital and the southeast. It also gives lower income borrowers access to loans with affordable terms, however any substantial increase in take-up might have a broader impact on the economy, the IMF warned.

The Help to Buy scheme is a great way of getting first-time buyers onto the property ladder. Are you planning on taking advantage of it while you can?

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