A mortgage guarantee scheme to help people get on the property ladder is to be extended by a year.
The government said the programme, which was due to close at the end of December, would help buyers “navigate difficult times”.
It was originally designed to encourage lenders to give home loans to people offering a 5% deposit – a product that was far less available during Covid.
Some lenders still play it safe as buyers face the rising cost of living.
Chief Secretary to the Treasury John Glen said: “For hard-working families facing today’s challenging economic conditions, it is right that we continue to help them secure their first home or move into their dream house.
“Extending this scheme means thousands more have the chance to benefit, and supports the market as we navigate through these difficult times.”
The mortgage scheme has a £600,000 limit, and is primarily used to help first-time buyers.
These 95% loan-to-value mortgages are often seen as riskier by banks as they are more vulnerable to falling property prices, when there is a risk that people hold more debt than their home is worth.
Under the scheme, the government takes on some of the risk and compensates the lender for some of the loan if the property is repossessed.
It began in April last year, and the government said it had helped more than 24,000 households.
Some brokers have suggested the scheme had done its job by bringing more low-deposit mortgages onto the market, but others suggested only a small number of lenders had used the scheme.
Many mortgage providers generally only lend to those with a regular income, irrespective of any government incentive, and still carry out affordability checks.
Unemployment levels are expected to rise and the UK housing market is expected to slow.
A recent survey by the Building Societies Association, suggested that 14% of people thought now was a good time to buy a property, but 47% did not think now was a good time to purchase a home.