Help to Buy scheme "should not become permanent", says King

King compared the three year scheme, under which the Government will offer guarantees to lenders offering mortgages to buyers who have a deposit between 5% and 20%, to the US mortgage guarantee schemes which triggered the financial crisis.

"I'm sure that there is no place in the long run for a scheme of this kind. This scheme is a little too close for comfort to a general scheme to guarantee mortgages," King said.

He said that the UK had a "very healthy" mortgage market before the crisis "with competing lenders attracting borrowers". "We need to get back to that healthy mortgage market," he said. King said that the right time to terminate the scheme would depend on economic conditions at the time.

Treasury Minister Danny Alexander said in response to the comments by King that the scheme was "never intended" to be permanent, according to BBC reports.

He said that the Government had been "very explicit" that the scheme is limited to three years and that they would seek the view of the Bank of England's new financial policy committee before making any decisions to extend.

The Help to Buy scheme, which also comprises an equity loan scheme, was introduced in March by Chancellor George Osborne as part of the 2013 Budget. The mortgage guarantee will run for three years starting in January 2014 and will make up to £12 billion of guarantees available to support £130bn of mortgages.