The Budget confirmed that Help to Buy 1 would be extended until 2020 yet The Help to Buy 2 mortgage guarantee is projected to end in 2016.
Crone said: “The more time that passes without a clear exit strategy the more we risk a ‘cliff’ effect in two years’ time that will undermine building and home-owning ambitions.
“The government needs to actively explore a transition for the mortgage guarantee scheme to the private sector to avoid another high LTV lending blackout after 2016.”
He added that the UK should follow Canada and Australia’s lead by having a permanent, stable market for high LTV mortgages.
Ray Boulger, senior technical manager at John Charcol, agreed that 95% LTV mortgages are crucial for the government, yet he argued that they don’t necessarily need to plan for an exit strategy.
He said: “Since Help to Buy 1 is going to be increased that takes away the need for an exit.”