The news that the government backed Help to Buy scheme will be extended to buyers of existing homes has been welcomed by local estate agents.

Chancellor George Osborne met mortgage lenders and housebuilders last week to discuss extending the scheme to those wanting to buy existing homes. The first phase of the scheme was launched four months ago and provides equity loans for buyers of new homes. Under the scheme, the government guarantees a proportion of the loan to give banks confidence to lend.

The second phase of Help to Buy will come into effect in January and will allow people to buy with a five per cent deposit. However the scheme will be closed to second home buyers.

Sam Mitchell, regional managing director for Your Move in London, said: “It appears that the existing Help to Buy Scheme has had a positive impact on the market with the Home Builders Federation already announcing that it led to 4,000 new-build home reservations in just two months with more then 500 people a week taking advantage of it since its launch in April.

“The Mortgage Guarantee Scheme – which will include existing properties, not just new ones – must therefore be met with some positivity especially if it supports even more people who are unable to raise large deposits and encourage more high to loan value lending.

“The big issue remains, however, as to whether there will be houses, new and existing, to support the increase in demand and, if not, if this could see prices rise and simply aggravate the situation for would be buyers. “Let’s hope current discussions between the government, lenders and house builders will address these concerns and ensure that the key objectives of the scheme can really be met . “Overall, many are simply looking for more clarity on how the scheme will work before making any key judgements on it.” Help to Buy has already been hailed a success by the Home Builders Federation.

Stewart Baseley, executive chairman at the federation, said: “The equity loan part of Help to Buy has got off to a flying start. “It has been an unqualified success so far and 4,000 reservations in just two months shows both the consumer demand for the scheme and developers’ commitment to it.”