In the Budget, George Osborne outlined details of the new ‘Help to Buy’ scheme.

It consists of two components. Firstly, £3.5 billion will be available in capital spending to shared equity loans, up to 20% up to value of new build home.

The borrower puts down 5% deposit from savings; the government will provide an interest free (for five years) loan of additional 20%. The property can’t be worth more than £600,000.

The second element is a new mortgage guarantee available to lenders to increase LTVs, available to all homeowners.

Osborne said it will support £130 billion in mortgages.

It is available from start of 2014 and run for three years.

CML director general Paul Smee said: “The announcement of Help to Buy which will help mitigate the risk of those lending low deposit mortgages shows a positive re-focus on promoting home ownership. The benefits will not be immediate, and we need to look at the detail of implementation, but this could have a significant impact in the medium term.”

Stephen Noakes, mortgage director at Lloyds Banking Group, said he believes that the mortgage guarantee scheme will give a boost to the housing market and address the issue of accessibility.

“Since the launch of the Government’s Funding for Lending scheme we have seen mortgage rates hit an all-time low, really making a difference to affordability. These proposals will, just as importantly, address accessibility, and provide a genuine solution to the challenge of raising a deposit. Working together these two schemes will get more people on and moving up the property ladder.

“Crucially, this scheme will not only help first time buyers but also second steppers, a key segment of the housing market that is also in need of more support and attention. Our recent report from Lloyds TSB indicates that little has improved in the past year for those first time sellers looking to take the second step on the housing ladder, almost two thirds of second steppers had wanted to move up the ladder in 2012 but were unable to. Raising a deposit has been cited as one of the key challenges.

“Whilst the property market is likely to continue to be challenging, the fresh support announced today will have a real knock on effect across the whole of the housing market and we expect it could help around 50,000 people a year.”