Plans to help first time home buyers may lead to over-indebtedness
"At first glance the offer of help to first time buyers sounds useful. However this scheme comes at a time when after several years of steep rises the market is cooling."
London, 1 May 2005 -- Keith Tondeur, director of Credit Action, the money education charity, has warned that the Chancellor's proposals to introduce cheaper mortgages specifically to help young people on to the housing ladder may encourage them to take on more debt than they can afford.
He said:
"At first glance the offer of help to first time buyers sounds useful. However this scheme comes at a time when after several years of steep rises the market is cooling. One question that we should be asking is whether this is being done to keep the housing market buoyant so that people feel confident and therefore keep on spending".
"House prices are undoubtedly too high for many people to afford which explains why numbers of first time buyers have been falling, with the average age of a first time buyer rising sharply.
This scheme could therefore, if care is not taken, create a false market and lead to first time buyers taking on a large amount of long term debt that they could well struggle to repay."
