Martin Lewis has moved to warn potential house buyers following Rishi Sunak’s announcement that low deposit mortgages will make a comeback next month.

The Chancellor announced a “mortgage guarantee”, as he detailed the government’s spending plans in Wednesday’s budget.

He told MPs: “Lenders who provide mortgages to homebuyers who can only afford a 5% deposit will benefit from a Government guarantee on those mortgages.

“I’m pleased to say that several of the country’s largest lenders including Lloyds, NatWest, Santander, Barclays and HSBC will be offering these 95% mortgages from next month, and I know more, including Virgin Money will follow shortly after.

“A policy that gives people who can’t afford a big deposit the chance to buy their own home. As the Prime Minister has said, we want to turn generation rent into generation buy.”

The scheme will be available to current homeowners as well as first-time buyers looking to buy a house for up to £600,000.

The initiative will be available to lenders from April and is designed to increase the appetite of mortgage lenders to offer high loan-to-value lending to creditworthy customers across the UK.

Under the scheme the Government will offer to take on some of the risk of low deposit loans, meaning lenders would have some protection from potential losses.

But Money Saving Expert Martin Lewis urged caution when considering buying a home at a five per cent deposit while live tweeting the Budget announcement.

He tweeted: “Chancellor pushing new 5% deposit mortgages for first-time buyers backed by a govt guarantee.”

He added: “WARNING last time this happened, these mortgages weren't cheap.

“I would still suggest if you can push to 10% where mortgage rates drop.”