The outgoing governor of the Bank of England has issued a warning over George Osborne's plan to boost the housing market.
Sir Mervyn King told Sky News the Help To Buy scheme was "too close for comfort" to the US mortgage guarantee schemes that triggered the financial crisis and must not be allowed to become permanent.
The scheme, unveiled in the Budget, will see the Government guarantee up to 15% of a mortgage on properties worth up to £600,000.
It is due to run for three years, beginning in January 2014.
But Sir Mervyn told Sky's Murnaghan programme: "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.
"We had a very healthy mortgage market with competing lenders attracting borrowers before the crisis, and we need to get back to that healthy mortgage market.
"We do not want what the United States have, which is a government-guaranteed mortgage market, and they are desperately trying to find a way out of that position.
Responding to Sir Mervyn's comments, a Treasury spokesman told Sky News: "The Mortgage Guarantee scheme will provide much needed help for people who can't afford a big deposit to get a mortgage.
"This is a good use of the Government's fiscal credibility that will support home buyers and home building.
"The scheme will run for three years from January 2014. A future Government would need the agreement of the Bank of England to extend it."
Help To Buy consists of two elements, an "equity loan" scheme and the mortgage guarantee.
Under the equity loan new or existing homeowners will need to raise a deposit of 5% of the value of the property they want to buy, but can borrow up to a further 20% from the Government on an interest-free basis.
The biggest loan available will be £120,000.
Sir Mervyn also called for an end to bankers being "demonised" for their role in the financial crash - insisting the problem was with the system rather than individuals.
He said: "What bankers did was not the only explanation of the crisis that we had.
"What we had was a world in which interest rates had become very low, investors of all kinds - not just banks - were desperately searching for ways in which they could earn more return, so they took big risks.
"Those risks, some of them, went wrong. I would say to people, though, don't demonise individuals here. This wasn't a problem of individuals, this was a problem of a failure of a system.
"We collectively allowed the banking system to become too big, we gave it far too much status and standing in society and we didn't regulate it adequately by ensuring that they had enough capital. We have to put that right."
He said reforms already underway into how the City is regulated would restore pride in British banking.
Sir Mervyn also spoke about Britain's efforts to bounce back following the downturn, saying the country's economy had achieved "only a modest recovery".
"We are seeing a recovery. It's only a modest recovery, and we certainly can't be satisfied with it," he said.
"We will need to do more to use up the spare capacity and to get back to a healthy, growing economy. But we are in a recovery period now."
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