U.S. Markets open in 8 hrs

Lloyds CEO warns against housing "Help to Buy" bubble: FT

Lloyds Banking Group CEO Antonio Horta Osorio poses outside the bank's headquarters on his first day back at work after taking a leave of absence due to exhaustion, in the City of London, January 9, 2012. REUTERS/Andrew Winning

(Reuters) - The chief executive of Lloyds Bank (LLOY.L) has warned that the government's "Help to Buy" mortgage scheme will risk creating a dangerous bubble in property prices unless steps are taken to boost the supply of new housing and free up planning restrictions, The Financial Times reported.

The FT quoted António Horta-Osório, the CEO of Lloyds as saying, "It is important that planning permits, building authorizations and social housing projects are (liberalized) so that the increase in (mortgage) transactions does not lead to a substantial increase in house prices."

"I think the scheme should be focused outside London and the southeast. (In the rest of the country) you have nothing close to a housing bubble," the FT quoted him as saying.

Lloyds, which is 33 percent owned by the British government, could not be reached immediately for comment.

Lloyds, along with RBS (RBS.L), HSBC (HSBA.L), Santander UK (SAN.MC) and Barclays (BARC.L), has already signed up for scheme which, in exchange for a fee, will give banks greater protection against losses.

The only big lender yet to commit is the customer owned Nationwide (POB_p.L), one of the few lenders already offering mortgages to buyers with small deposits.

(Reporting by Tasim Zahid in Bangalore; Editing by Leslie Gevirtz)