Mark Carney told to rein in mortgages

"When we first introduced the LTV ratios … no-one thought that we did the right thing because all the experts and media thought that we were creating a problem that didn't exist. But after six months … a lot of people thought that we should do more, because this was now seen as a serious problem."

UK house prices have surged by 10pc over the past year, raising concerns that the market is overheating. Earlier this month, Chancellor George Osborne gave the FPC stronger macroprudential powers to curb mortgage lending, enabling it to force lenders to act rather than just make recommendations to the sector.

Mr Olsen, who advised the government to introduce similar measures in Norway, said making banks more robust was the key to keeping the financial system "robust to handle crises when they come.

"They have been introduced quickly in our country, for good reasons. It's about time to have stricter stricter regulations of banks. And countries should seek the necessary measures to build up bank buffers once their economy can sustain them," he said.

Interest rates are predicted to rise before the end of this year, and economists expect Mr Carney to announce "at a minimum" a new affordability test that would assess the ability of borrowers to cope with much higher mortgage payments when this happens.

Tough rules introduced in the Mortgage Market Review (MMR) in April require banks to check how mortgage applicants would cope with rising mortgage payments. However, it is currently up to lenders to decide what interest rate to apply for the test. Experts say the threshold could be set at around 7pc, the example used in the MMR rulebook.

"We expect that the FPC will have agreed to take measures to rein in the housing market," said Brian Hilliard, an economist at Societe Generale. "The minimum likely is the activation of the 'guidance on appropriate interest rate stress tests to be used by banks in their affordability tests'. Other measures are possible as well."

Some believe Mr Carney will go a step further and cap the amount people can borrow as a multiple of their income. State-backed lenders Lloyds Banking Group and the Royal Bank of Scotland have already limited mortgage lending on loans above £500,000 in a bid to cool the London market.

However, Mr Carney has noted that any action taken by the FPC will be "calibrated" and "proportionate" to avoid penalising some borrowers unnecessarily . He said last month that younger borrowers in particular had more "prospects of income increasing over their lifetime" than those "later in life", which should be taken into consideration.

Mr Andersson agrees: "No-one is saying that you need to die debt free. If you have an asset then you can have a debt on it. [But] if you have a very high debt … it might be a big burden when you retire because you will have a much lower income."

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