The scheme was introduced in 2013 to increase the availability of high loan to value mortgages. The withdrawal is going ahead as over 30 lenders are offering 90-95% loans outside the scheme.

Since the launch three years ago, 86,000 households have been supported by the scheme with an average property price of £157,000 compared to the national average price of £216,000.

The withdrawal of the scheme was welcomed by Andrew Tyrie MP, chairman of the Treasury Committee. He said: ‘ The Help to Buy mortgage guarantee scheme will not be missed. The Treasury Committee identified a number of problems with it, not least that it would inflate house prices and create a substantial liability for the taxpayer.

‘Government meddling in the mortgage market is fraught with risks and unintended consequences. The big challenge is to address the undersupply of homes, both to rent and to buy.

‘Property taxation remains distortive. Taxpayer subsidies for home ownership increases demand and prices, and may do little or nothing to increase supply.’

The government will continue to offer the Help to Buy equity loan and ISA schemes, although the Help to Buy ISA is set to be withdrawn as the Lifetime ISA replaces it. The latter offers more flexibility to access funds at the point of exchange of contract for first-time purchases. The current Help to Buy scheme only comes into effect at final completion, which means it key aim to help with deposits for first-time purchasers did not work.