Banks are preparing for an influx of mortgage applications after the Government expanded the Help to Buy scheme.

The £12 billion initiative, which enables homeowners to obtain mortgages with a deposit as little as 5% of the total value of the property, will also see 15% of the value of a property guaranteed by taxpayers, in return for a fee from the mortgage provider.

RBS, NatWest and Halifax are to start taking applications this week, with HSBC, Virgin Money and challenger bank Aldermore joining in January.

However, Lloyds Banking Group, which owns Halifax and Bank of Scotland, will not be putting forward its Lloyds subsidiary for the initiative.

Banks are preparing for overwhelming degree of interest from the public - some estimates suggest 180,000 loans could be taken out - with NatWest and RBS announcing that they will extend opening hours in their 740 branches over the next two weeks to cope with demand.

Stephanie McMahon, head of research at Strutt & Parker, commented: “With house price affordability and lenders’ deposit requirements beyond the reach of many, the government’s plan is to extend access to the housing market by providing deposit guarantees targeted at homes up to £600,000 in value. The logic is there; however, there are questions are about the long-term consequences of the scheme.”

“As today’s cheap debt becomes more expensive over the coming years with borrowing rates rising, will those buyers still find their homes affordable? The key is ensuring that monthly budgets can meet future interest payments in the 75% mortgage portion, and that people with stretched budgets are not lured in by currently depressed interest rates. Secondly something that has been widely criticised is the likelihood of heating up the market as pumping equity into the housing will facilitate further price growth thereby restricting access all over again.”

The Government has already brought forward the start date of Help to Buy by three months despite fears of a housing bubble.

“From today, thousands of people will be able to get a foot on the housing ladder by applying for the new Help to Buy mortgage guarantee. If you’ve got 5% of the funds for a mortgage deposit, we’re providing a guarantee to the banks to help you get the rest,” David Cameron, the Prime Minister, said.

“Help to Buy is going to make the dream of home ownership a reality for many who would otherwise have been shut out. This goes right to the heart of my vision for Britain - a country where everyone who works hard can get on in life,” Mr Cameron added.

“Moves such as Help to Buy will also encourage housebuilding. If potential buyers can’t buy, builders won’t build - so this is an important part of unlocking the market.”

The first phase of the Help to Buy scheme in England started in April, when buyers of new-build homes were eligible for a 20% equity loan from the Government on top of their 5% deposit.