Mortgage support must be cut: Balls

The Government's programme of taxpayer-funded support for first-time home buyers should be cut back amid fears rising house prices could push up interest rates, shadow chancellor Ed Balls has said.

Shadow chancellor Ed Balls wants a cutback of the Government's taxpayer-funded support for first-time home buyers
Shadow chancellor Ed Balls wants a cutback of the Government's taxpayer-funded support for first-time home buyers

In an interview with The Guardian, Mr Balls said the unbalanced nature of the housing market risked choking off Britain's economic recovery.

He called on Chancellor George Osborne to reduce the maximum size of a mortgage that qualifies for support under the Help to Buy scheme from £600,000 to £400,000 - with regional caps to reflect the vastly higher prices in London and the South East.

"The low interest rates we need to strengthen growth and business investment are under threat if we do not have a balanced housing market recovery," he said.

Mr Balls also called for an emergency "help to build" scheme, underpinned by new government guarantees, to support the building of a further 10,000 houses this year.

"The lack of funding for affordable housing, alongside a housing market that has been very slow to respond to rising demand, means there is a real risk for our economy," he said.