Earlier this year the Intermediary Mortgage Lenders Association said 75% of brokers and and 65% of lenders expected the market to suffer if it were dropped.
There have been warnings that the number of mortgage deals available with a 5% deposit could halve.
But Mr Hammond believes the market is sufficiently buoyant to thrive without the scheme and a letter to the Bank’s governor Mark Carney he said it was “important to note that the end of this particular scheme does not diminish in any way the government’s commitment to supporting those looking to get on the housing ladder”.
In his letter he said: “The mortgage market has become less reliant on the scheme as confidence has returned.
“There are now 30 lenders offering 90-95 per cent loans outside the scheme. This reflects the fact that the scheme was introduced with a specific purpose that has now been successfully achieved and, as such, I can confirm that it will close to new loans at the end of 2016 as planned. I will inform participating lenders.”
Some other help-to-buy schemes, including five-year, interest-free equity loans, will continue for the next four years.
It is not clear if the Scottish government will provide further help for homebuyers.