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Osborne defends mortgage help scheme

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(Globalpost/GlobalPost)

LONDON (Reuters) - Chancellor of the Exchequer George Osborne defended the government's new mortgage guarantee scheme on Tuesday, saying the primary aim was to get mortgage credit flowing, not to lift property prices.

"The objective of the scheme is to increase the availability of mortgages," Osborne told a parliamentary committee.

He refused to be drawn on whether the scheme would boost house prices, as many commentators - including Britain's independent budget watchdog - have suggested.

He said he had consulted Bank of England Governor Mervyn King about the three-year initiative and the BoE's financial policy committee would have the ability to intervene if it thought it were posing a risk to broader economic stability.

"You've got to be clear that you can then turn off the tap," Osborne said. "I've set this scheme and I've given to the Financial Policy Committee at the Bank the lock on the scheme."

In his budget last week, Osborne announced the "Help to Buy" scheme under which the government will guarantee up to 130 billion pounds of higher-risk mortgages.

(Reporting by Christina Fincher)

http://www.globalpost.com/dispatch/news/thomson-reuters/130326/osborne-defends-mortgage-help-scheme