The Help to Buy mortgage guarantee scheme will close at the end of the year, chancellor Philip Hammond has said.
The chancellor of the exchequer has said the scheme’s purpose has now been achieved.
In a letter to Mark Carney, the governor of the Bank of England, Mr Hammond said he would be informing the participating lenders the scheme would close to new loans at the end of 2016.
He said: “The scheme was introduced in 2013 to increase the availability of high loan to value mortgages, following a drop-off in the years after the financial crisis.
“The high LTV mortgage market has become less reliant on the scheme as confidence has returned.
“There are now over 30 lenders offering 90-95 per cent loans outside the scheme.”
More than 86,000 households have been supported by the scheme, with an average property price of £157,000 compared with the national average of £216,000.
Mr Hammond said the decision to close the mortgage guarantee scheme “does not diminish” the government’s support for the Help to Buy: Isa and the Help to Buy equity loan scheme.
Jane King, a mortgage adviser with London-based Ash Ridge Private Finance, said: “I used it quite a lot and I found it more useful than the new-build Help to Buy.
“There are a lot of lenders offering 90 per cent loans but not that many offering 95 per cent. I will be sorry to see it go, mainly because we will have a lack of choice.”