Charlie Bean, the Bank’s Deputy Governor, said “direct constraints” may be needed to restrict access to credit, and that homebuyers could be forced to put down sizeable deposits before being granted a mortgage by their banks or building societies. This would mean that prospective buyers would have to put down between 10 per cent and 25 per cent of a property’s purchase price as a deposit before being able to obtain a loan.
It is the first time that a senior official has indicated that the Bank may intervene directly with new rules on so-called “loan to value ratios” to stop risky lending. In the years before the credit crunch, some borrowers were lent 125 per cent of their property’s value and became stuck in negative equity when prices crashed. The move would also mark the return of so-called “credit controls” — scrapped in the early 1980s — which made it difficult for many borrowers to get a mortgage.
The Bank of England is expected to be given responsibility for regulating the overall banking market in the autumn after new laws are introduced by George Osborne, the Chancellor.
Over the weekend, Mr Bean published a policy paper at an international conference detailing how the Bank would approach its new role. There had been speculation earlier in the summer that Mr Osborne favoured a “mortgage cap” although he has never publicly discussed the scheme.
Last month, the Financial Services Authority, the current banking regulator, said that a policy of limiting mortgages was “too blunt” and could “unfairly deny” loans to creditworthy Britons.

David Hollingworth, of London & Country Mortgages, a broker, said: “The mortgage market is still very slow and the biggest hurdle at the moment is boosting the availability of home loans, not restricting them. Very few first-time buyers can afford a big deposit so its important that they are not excluded.
“The market has already self-corrected and there are only a very small number of mortgages for those with a deposit of less than 10 per cent already.”