The Mortgage Guarantee Scheme will be extended by a year, having already helped over 24,000 households get onto the property ladder.

The government said the programme, which was due to close at the end of December, would help more buyers get a foot on the housing ladder.

Launched in April 2021, the scheme supports first-time buyers, who make up 85% of scheme transactions, buy a home with a 5% deposit.

Under the scheme the government offers lenders the financial guarantees they need to provide mortgages that cover the other 95%, subject to the usual affordability checks, on a residential property worth up to £600,000.

Chief secretary to the treasury, John Glen, said: “For hard-working families facing today’s challenging economic conditions, it is right that we continue to help them secure their first home or move into their dream house.

“Extending this scheme means thousands more have the chance to benefit, and supports the market as we navigate through these difficult times.”

Since 2010, more than 687,000 households have been helped into home ownership through government schemes.

As well as first-time buyers and current homeowners, the scheme has also helped support the wider housing sector. Lenders reduced the availability of high LTV products during the Covid-19 pandemic, with just eight 95% LTV products available in January 2021. The government’s Mortgage Guarantee Scheme helped restore competition and consumer choice to the market, which has benefited businesses and boosted the market.