He told the Building Societies Association annual conference in Birmingham the subsidy helped many people who did not need it. 'It is a shotgun subsidy when a rifle shot would be preferable.'
'In other countries, subsidy is available for a limited time that clearly benefits those in the early years of home ownership. In some countries, more subsidy is available to families with children.'
He suggested that home owners on low incomes could be provided with housing benefits akin to those in the rented sector. 'We will continue to request such a scheme to be considered in future budgets.'
Tim Melville-Ross, chief executive of Nationwide Building Society, supported Mr Blackburn's call for mortgage benefit.
Mr Blackburn also called for incentives to boost the private rented sector. He said: 'If the Government wishes to promote small landlords - that is, the individual who inherits a property or who wishes to invest in one or two properties - then exemption from capital gains tax and exemption of rental income from tax could be attractive.'
He also attacked the cut in housing association grants. 'As the proportion of private finance increases, so the lending risk profile rises. And as grants fall, so housing associations have to build fewer houses or houses of lower quality, creating the possible sink estates of the future.'