Alex Brazier told the Future of Finance Conference in London that mortgage rates have plunged in recent years, while loan-to-income ratios have increased.

The proportion of new mortgages at loan-to-income ratios just below 4.5 has almost doubled in the past five years, making up almost a fifth of new mortgages, according to the Bank of England official.

He warned that households with higher mortgage debts typically make cutbacks in downturns, so the more of these borrowers that were present in an economy tended to deepen a recession.

Rules to limit the amount of mortgage lending at more than 4.5 times a borrower’s income are now preventing lenders from taking excessive risks, Brazier said.

But he added that developments in the mortgage market could signal more generalised pick-up in risktaking, which “must not be at the expense of the resilience of lenders to any future downturn in the economy”.

Riskier rates falling

Brazier said: “Mortgage rates have fallen materially relative to bank rate, especially at the riskier end of the lending spectrum.

“And lenders are now prepared to take a bit more risk.”

The official hinted that mortgage regulation would not be overhauled at this point, but will be closely monitored over the coming months.

He said: “There is no flashing warning light here telling us to pull over urgently.

“There is, perhaps, the light that reminds us the car is due for a service.”