Osborne Challenged Over Housing Bubble Denial

George Osborne has flatly denied that a housing bubble is forming, only to be contradicted hours later by one of his Tory predecessors. The current chancellor promised that any big rises in house prices would be curbed, and the UK would have a "responsible recovery". He said there is "not a housing bubble at the moment". However, Lord Lamont, a chancellor under Sir John Major, promptly offered the opposite view, suggesting there is a danger that the housing market is overheated – a situation that could be worsened by the Treasury's Help to Buy scheme. "There's been a huge fall-off in mortgage applications and turnover in the housing market and at the same time, in the south, you have a much faster rise in prices, while in the north some areas prices have fallen 40%. So it's a very, very difficult judgment to make.” Read more on the Guardian website.

Boom in Buy-To-Let Mortgages Could Bring Economic Collapse

Lord Lamont, chancellor during the last recession in the 1990s, has warned ministers to be wary of the sudden growth in the buy-to-let property market which he fears could collapse, causing wider economic catastrophe.  The rapid boom in the market should not be a cause of unqualified celebration he warns because of the impact that an inevitable rise in interest rates will have on lenders and buyers.  Lending to landlords hit £5bn in the past three months, even before the Bank of England's pledge to keep interest rates low. More than one in 10 mortgages are being handed to prospective landlords who are taking advantage of a low interest rate and the pledge by the Bank's new governor that it will not rise until employment reaches 7%, a threshold that is not expected to be reached until 2016.  Read more on the Observer website.