The Government has confirmed the ending of one of David Cameron’s flagship housing policies, the Help to Buy mortgage guarantee scheme.

While some commentators have said it is a U-turn, research show that this part of the Help to Buy scheme was always going to end on December 31.

In a letter to the Bank of England yesterday, Chancellor Philip Hammond said the scheme would not be extended beyond 2016.

Under the £12bn guarantee scheme, the Government stands behind lenders running high-stress 95%t mortgages. It has been available to buyers of both new and secondhand properties since January 2014, but in fact reassures lenders rather than buyers that should the lender have to re-possess the property, it will not lose out.

Other parts of Help to Buy – the equity loan scheme available on new builds only,  and the ISA bank account – will continue to operate.

The loan element of the scheme is less controversial because it can only be used on new homes, meaning it is linked in some way to supply, while  the ISA scheme effectively gifts additional money to people who have saved a deposit.

In his letter, Hammond said the guarantee scheme had already helped over 86,000 households and would “end as planned”.

Richard Sexton, director at e.surv, said: “To date, the Government has demonstrated enthusiasm in its appetite to support the housing market.”

He went on to claim: “This U-turn by the Chancellor begs the question of whether a change of emphasis is afoot. A fluid housing market is key to the overall health of the economy, and supporting first time buyers onto the property ladder is critical to achieving that.

“The early success of the scheme led many high street lenders to include higher LTV products in their offerings. With this in mind, the withdrawal of Help to Buy may not have a dramatic an impact on the market. However, lenders who made plans to include the scheme as part of their product range may now have to revise their strategies.

“It will be interesting to see how this move affects transaction levels over the coming months, and how lenders and borrowers alike react to the change.

“While the housing market is certainly on the road to recovery, we are not out of the woods yet, and the industry and the Government need to work together to ensure the market remains accessible to those looking to take their first steps onto the ladder.”