The scheme, which was introduced three years ago to stimulate the housing market, gave first-time buyers the chance to buy a home with a Government-backed loan worth up to 95% of the value of the property.

In a letter to Bank of England governor Mark Carney, the Chancellor Philip Hammond said the scheme had a “specific purpose that has now been successfully achieved”.

The scheme was scheduled to expire this year, but mortgage lenders had called for it to be replaced, warning that its closure would push the first-time-buyer market back into decline.

The mortgage guarantee scheme, which formed part of the wider Help to Buy policy still being retained, had proved controversial because of worries its would contribute to an unsustainable housing bubble boosting demand for homes without raising supply.

The government will continue offer the highly popular Help to Buy equity loan and ISA schemes.

Latest figures show that over 185,000 completions under the schemes have taken place, of which over 150,000 households have been first time buyers.

Stewart Baseley, executive chairman of the Home Builders Federation, said: “Help to Buy continues to drive demand for new build homes by making home ownership more affordable and realistic.

“Its success is directly leading to more homes being built as it provides the confidence developers need to invest in the land and people required to increase their output.”