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Sir Mervyn's concerns about Help to Buy echo those of the Treasury Select Committee, which reported on the Budget last month.
The committee warned the Government will come under "immense" pressure to extend Help to Buy in three years time.
– The outgoing governor of the Bank of England Sir Mervyn King.
We do not want what the United States have, which is a government-guaranteed mortgage market, and they are desperately trying to find a way out of that position.
So, we mustn't let this scheme turn into a permanent scheme. Now when is the right time to terminate it will depend on economic conditions at the time."Sir Mervyn said the economy was in a "modest recovery" but "we certainly can't be satisfied with it".
We will need to do more to use up the spare capacity, and to get back to a healthy, growing economy," he said. "But we are in a recovery period now, I think, yes.
Under the equity loan new or existing homeowners will need to raise a deposit of 5% of the value of the property they want to buy, but can borrow up to a further 20% from the Government on an interest-free basis.
The biggest loan available will be £120,000.
The outgoing governor of the Bank of England has warned that George Osborne's plan to boost the housing market is "too close for comfort" to a general state guarantee for mortgages.
Sir Mervyn King said there was "no place in the long run" for the Chancellor's Help to Buy scheme, which will see the Government will guarantee up to 15% of a mortgage on properties worth up to £600,000
The scheme, which starts in January 2014, is due to run for three years and Sir Mervyn warned it must not be allowed to become permanent.
In an interview which will be broadcast on Sky News' Murnaghan programme later today, Sir Mervyn said: "I'm sure that there is no place in the long run for a scheme of this kind.
"This scheme is a little too close for comfort to a general scheme to guarantee mortgages. We had a very healthy mortgage market with competing lenders attracting borrowers before the crisis, and we need to get back to that healthy mortgage market."
The Pakistan Tehreek-e-Insaf PTI's leader, former international cricket star Imran Khan, immediately blamed the killing on the Muttahida Quami Movement.
The MQM has a stranglehold on politics in Pakistan's biggest city, Karachi.
"Her death has sent shockwaves across the rank and file of the party," Khan said in a statement.Police said that two gunmen shot Hussain dead outside her home in an upscale neighborhood of Karachi, he said.
"I hold (MQM leader) Altaf Hussain directly responsible for the murder as he openly threatened PTI workers and leaders through public broadcasts," he added in a tweet.
"I also hold the British government responsible as I had warned them about British citizen Altaf Hussain after his open threats."
Gunmen killed a senior female politician from a reformist party in Pakistan on Saturday night, the latest violent incident in a bloody election campaign and one that set off a war of words between two major opposition parties.
Around 150 people were killed in the run-up to national elections held last week, which handed a landslide victory to opposition leader Nawaz Sharif and his PML-N party.
It marked the first time an elected government replaced another one in a nation that has been run by military leaders for more than half its history.
Results from a handful of constituencies are still awaited amid accusations of vote-rigging.The shooting came hours ahead of re-polling in a key area beset by allegations of voting fraud.
It was not immediately clear who killed Zara Shahid Hussain, a senior member of the Pakistan Tehreek-e-Insaf party.
The PTI has promised to reduce endemic corruption in the nuclear-armed nation of 180 million people.
Denmark's Emmelie de Forest says she was 'amazed' to find out she had won the Eurovision Song Contest and admitted that when she was first told she "just didn't understand it".
Winner of the Eurovision Song Contest Denmark's Emmelie de Forest said she is “overwhelmed, surprised but happy”.
It's official. They cannot be beaten. DENMARK HAS WON THE 2013 EUROVISION SONG CONTESTFrom @Eurovision on Twitter: