George Osborne has launched the second phase of his landmark Help to Buy programme.

The chancellor introduced the new scheme at a meeting with mortgage lenders and housebuilders, as he sought to allay fears among opposition figures that his policy would cause a bubble in the housing market.

Treasury officials said that fees for Help to Buy clients will be based strictly on loan-to-value banding, which will be decided following discussions with brokers at today’s (July 23rd) conference.

Mr Osborne said: “The mortgage guarantee will support an increase in high loan-to-value mortgages for people who can’t afford large deposits and it will also boost housebuilding.”

Help to Buy guarantees will help those trying to get onto the property ladder by providing a five-year interest free loan worth 20 per cent of the value of any home up to the value of £600,000.

It is hoped by ministers this will help boost the UK’s construction industry, which has been hit hard by the recession and continues to be a drag on general growth rates.