In a letter to the Bank of England on Thursday the Chancellor Philip Hammond said the scheme would not be extended.
The scheme, which has been available to buyers since January 2014, has seen over 89,000 mortgages taken out.
Other parts of Help to Buy – the equity loan scheme and the Help to Buy ISA – will continue to operate.
Richard Sexton, Director at e.surv comments:
“To date, the government has demonstrated enthusiasm in its appetite to support the housing market. 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."
