The National Asset Management Agency (NAMA) is to close the "80/20" mortgage scheme it introduced two years ago to coax nervous buyers back into the housing market.
NAMA said that the so-called deferred mortgage scheme will be closed to new buyers from the end of May.
Purchasers who have already bought a house using the scheme, or who buy between now and the deadline, will not be affected.
NAMA launched the scheme in 2012 in order to help shift its stock of new houses at a time when buyers had shied away from house purchases in part because they feared being left in negative equity if house prices fell further.
The NAMA deferred mortgage product was structured so that anyone who did take out one of the mortgages to buy a house from the agency was protected if the value of their home fell over the five years after they made the purchases.
Under the scheme buyers will have up to 20pc of their mortgage refunded to their bank by NAMA if the house declines in value.
NAMA said it was withdrawing the scheme, which was always intended to be short term, because of falling demand.
The NAMA mortgage has only been available to buyers of homes in 33 housing estates in 13 counties.
Of 412 properties available, more than 100 houses have been sold to buyers who opted to use the scheme. Around the same number again were sold to cash buyers and others who opted not to use the scheme.
The uptake has declined from 68pc to 50pc, NAMA said.
"The fact that buyers are no longer actively seeking protection from price falls is a welcome sign that the housing market is stabilising and returning to more sustainable, normalised conditions," the agency said in a statement.
House prices fell in 2012, the first year of the scheme, before stabilising nationally last year.
Meanwhile, stockbrokers Davy has given a relatively upbeat assessment on the health of the construction sector. It said that the sector looks set to record its first calendar year of growth in 2013 since the recession began, one year earlier than had been previously expected.
"Nonetheless, output in the sector is still well down on peak levels," said analysts Conall MacCoille and David McNamara.
"But this means the sector has ample room to bounce back in the coming years."
The Davy report assessed recent trends in construction sector employment and labour productivity, with the findings suggesting that jobs growth could rise back towards 150,000 over the medium term, adding around 3pc to aggregate employment.
Employment was up 4.3pc year-on-year to 105,400, having troughed in the first three months of last year at 96,300.
"This compares to the heady days of 2007 when the sector employed 274,000 people at peak and illustrates how far the sector has contracted in the following years," the report said.
It added that recovery in the sector will focus on the residential and commercial markets, predominantly in Dublin, where supply shortages are now becoming apparent.