An analyst at Societe Generale has called George Osbourne’s new Help to Buy mortgage scheme “moronic”.
Albert Edwards also said the initiative was an “unusually misguided piece of government interference in the housing market”.
The new Help to Buy scheme will provide lenders with a guarantee of up to and including 20 per cent of the price of the property – so the taxpayer will be liable if a creditor defaults from their government supported loan .
Up to £130 billion worth of loans will be backed under the new scheme, with the first guarantees to be offered in January 2014.
The International Monetary Fund has already warned the government the programme could inflate a new property bubble – something that had devastating consequences in the US economic crash of the late 2000s.
Mr Edwards added: “What makes me genuinely really angry is that burdening our children with more debt, on top of their student loans, to buy ridiculously expensive houses.”
According to the Telegraph, other critics of the scheme include outgoing Bank of England head Mervyn King, the Labour party and Andrew Bridgen, a senior economist at Fathom Consulting.
