The Association of British Insurers (ABI) have claimed that the Homeowners Mortgage Support Scheme will not aid the flagging housing market.

As the credit crunch wears on, many homeowners are finding it difficult to keep up mortgage repayments, but also unable to find a cheaper remortgage deal.

The ABI welcomed the government’s recognition that more borrowers are taking on mortgages without mortgage payment protection insurance that ever before.

The organisation argued, however, that the scheme was unsuitable.

An ABI spokesperson said: “Rather than use scarce public funds where self-help is available through protection insurance, we firmly believe that the right long-term solution is for the insurance industry and the government to work together.”