The equity loan scheme was announced in last year’s Budget and was initially expected to run until spring 2016. However, ahead of Wednesday’s Budget statement Osborne has revealed his plans to extend the scheme for a further four years.

“The key part of economic security is the security of being able to afford your own home,” Osborne told the BBC’s The Andrew Marr Show.

“Our Help to Buy scheme has helped people into homes and has helped build new homes, but I want to extend the Help to Buy scheme for newly built houses which was going to end in 2016 for the rest of the decade.”

He said the Help to Buy equity loan would create 120,000 new build homes across its lifetime and also announced plans for a new garden city to be built in Kent.

“For the first time in 100 years, going to build a garden city in Ebbsfleet in the Thames Estuary. This means more homes, more aspiration for families and economic security and economic resilience. Britain has got to get building.”

Osborne said the initial plans would see 15,000 new homes built in the area.

“In Ebbsfleet there is the land available, there is fantastic infrastructure with the High Speed line. It’s on the river and in the South East of England where a lot of the housing pressure has been and crucially you have local communities and local MPs who support the idea.”

Charles Haresnape, managing director of residential mortgages at Aldermore Bank, welcomed the extension to the Help to Buy scheme.

“An extension of Help To Buy to the end of the decade is good news for first time buyers who continue to struggle with deposit raising as house prices rise. This demonstrates that the government believes this is sustainable and not inflationary.”

But Haresnape said the garden city project could have made a greater impact in a more northern location.

“I have been suggesting this for some time now but the main question is why is this another southern-based initiative rather than boosting infrastructure in the north where land prices are cheaper and more employment could be encouraged.”

Andy Frankish, new homes director at Mortgage Advice Bureau, said: “With the Help to Buy equity loan scheme extended until 2020, the construction industry can push ahead with buying land and increasing production safe in the knowledge that government is firmly behind it. Not only will the move help to address our crippling housing shortage, but the knock-on effect on investment in materials and labour will deliver a major boost to the wider UK economy.

“Developers are now in a position to cast aside their doubts and focus on ramping up production with a queue of buyers all but guaranteed until the end of the decade. The extension should also encourage more lenders to back the equity loans and boost the choice of available products. A number of major lenders are yet to join the scheme, but with government funding confirmed, any new arrivals would really help to move Help to Buy up another gear.”

Location of Ebbsfleet: