One thing I learned in Hanover this weekend – UK Housing Subsidies Edition

Sorry for the light posting – I was out of town for a college reunion. It was great to talk to old classmates. One of my friends who lives in London told me about new UK mortgage subsidy programs that have recently been implemented to stimulate the housing market.

The Help to Buy Program asks new homeowners (or those buying new homes) to put at least 5% down. It provides subsidized government loans that enable buyers to have 20% “to put down” to supplement a standard mortgage of 80% of the purchase price of the home. Another program that is starting Jan 1, 2014, will provide mortgage guarantees for those who put at least 5% down and buy homes for less than 600K.

More posts to come regarding my thoughts on this program. Among others, Mervyn King has warned of the dangers associated with letting this temporary mortgage market support turn into a long-term GSE-like program.

Related: Dylan Matthews has a nice post on recent economic performance in Britain.

About ozidar

I'm an Assistant Professor of Economics at the University of Chicago Booth School of Business and a Faculty Research Fellow at National Bureau of Economic Research. You can follow me on twitter @omzidar.
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