It said that the market must use the interest in FirstBuy as a launch pad to help more individuals get onto the property ladder, but suggested that a lack of innovative mortgage products may hold this back.
Since the scheme was announced by the Chancellor in the March Budget, Paradigm said it has been urging lenders to come up with first-time buyer loan solutions to help aspiring homeowners.
It said that innovative loans should focus on the difficulties many first-time buyers have, including securing a large deposit to get a mortgage.
In addition, it is encouraging advisers to make sure they understand the variety of first-time buyer mortgage schemes that are available as they may be appropriate for those who are not eligible for FirstBuy Direct.
Bob Hunt, chief executive of Paradigm Mortgage Services said that while the government has rightly identified the major problem for first-time buyers, more schemes are still needed within the wider market which also tackle this problem.
“The FirstBuy scheme is a positive but, given it is for new-builds only, the purchases made will not help develop any property chains whereas other properties are likely to be the start of a chain which could illicit five or six further property transactions,” he said.
The scheme is earmarked to start in September 2011 and of the £250m on offer, £210m will be shared in England, while Scotland, Wales and Northern Ireland will share the other £40m.
Hunt added: “The other important point to make regarding FirstBuy is that it is a limited pot of cash, so it is imperative the mortgage industry also helps provide a variety of solutions for those who may not be able to use the scheme.”