Chancellor George Osborne has committed to keeping interest rates low, while also promising that he would support the Bank of England in deflating any asset bubbles.
Citing the improving public finances and stronger economic growth, Osborne told Parliament: ‘The Bank of England can keep interest rates lower for longer and support the economy’.
But recognising that this could inflate prices, the chancellor emphasised that he had ‘given the Bank of England the power to monitor debt and take action to deal with asset bubbles’ in order to foment a ‘responsible recovery’.
Focusing on house prices in particular, Osborne stated: ‘We want a functioning, stable housing market’.
Osborne maintained that the Help to Buy scheme was instrumental in achieving this. He noted that the Office for Budget Responsibility had warned on the weakness of housing supply in the country, but pointed to data indicating that residential construction is growing at its ‘fastest rate for a decade’.
He said: ‘If we want more people to own a home, we have to build more homes.’
However, Osborne also observed that ‘it’s not enough to build more houses if families do not have the deposits to buy’. He confirmed that two challenger banks, Aldermore and Virgin, had signed up to join Help to Buy this month.