According to Berenberg Bank chief UK economist Rob Wood, the central bank prefers to use specific measures focused on the housing market rather than the “blunt tool” of raising interest rates.

He welcomed the central bank’s decision to redirect the Funding for Lending Scheme away from mortgages: “That BoE action is likely to be the first in a series of measures over the next year, perhaps culminating in scaling down the Help-to-Buy scheme next September. We would like to see that scheme cancelled immediately, but the politics prevent that.”

The central bank has as little interest in causing a housing crash as it does in blowing up a housing bubble, he added, and any changes are likely to be gradual.

Announcing the end of Funding for Lending for mortgage lending last week, the Bank of England governor Mark Carney stressed the central bank has a number of financial tools at its disposal which it will use if banks begin lending recklessly.

More than a third of Brits expect interest rates will rise over the next 12 months, a Bank of England poll revealed today.

However, 43% believed interest rates will stay about the same – the second highest proportion since the survey began in 1999. Two-fifths of respondents said a constant rate would be best for the economy, while 18% believed interest rates should go down.

But Wood argued using interest rates to redirect lending was “off the cards”. He said: “They are willing to act, but with surgical measures focused on the housing market specifically rather than the blunt tool of using interest rates.”