Panel member Paul Lewis, presenter of BBC Radio 4’s Moneybox, said he was “deeply suspicious” of the government’s NewBuy scheme which offers buyers of new property mortgages up to 95% loan to value.
The loans are backed in part by a government insurance scheme and builders.
Lewis said: “It’s only about new houses and many people don’t buy new houses as their first home, they buy run down terraces. That’s a distortion.
“I think it’s there to help house builders who do not need any help. They have so much land they could solve the housing shortage in two or three years but they will not build. I don’t think this is going to encourage them to do that.”
Nigel Terrington, another panel member and chief executive of the Paragon, said: “I think it’s an admirable proposal coming from the government but it’s a bit of a drop in the ocean. I don’t think it’ll make material changes.”
But Paul Smee, director general of the Council of Mortgage Lenders, defended the NewBuy scheme.
He said: “It isn’t just aimed at first-time buyers it’s aimed at new property and the reason for that is it’s part of the government’s wider agenda and getting builders off the dole.
“It isn’t necessarily about getting people on the housing ladder. Will it be the answer to the nation’s housing problems? No it won’t.
“But I suspect it will have some incremental benefit for the construction of new houses...and it will enable some people who are renting to buy. On balance it’s a good thing.”
Terrington said a bigger problem for first-time buyers was the cost to banks of lending at high LTVs.
And he added: “There’s a lot of good lending that could be done at 90% LTV but the banks cannot price it to make it profitable or even at a level that the first-time buyer can pay.
“The cost of capital ratios is so high for high LTV lending....that’s a far more significant issue for first-time buyers. I think the scale of difference between what is a 60% LTV and a 90% LTV is just wrong.”
