Last week, business secretary Cable (pictured) said that the planned Help to Buy 2 scheme, due for launch in January, would cause a spike in UK property prices.

Help to Buy 2 will encourage lenders to offer higher loan-to-value mortgages to borrowers with small deposits/amounts of equity at lower interest rates, by insuring part of the loans against default.

Lib Dem leader Nick Clegg and treasury secretary Danny Alexander have opposed that view.

Clegg told the BBC that the housing market was still well below the peak: “We’re not talking about encouraging banks to irresponsibly lend at 120% mortgages. We’re just giving creditworthy customers the ability to borrow money to get their feet on the first rung of the property ladder.”

Alexander told Sky News that Britain is ‘a million miles’ from a housing bubble:

“Of course in central London, in Kensington and Chelsea, you see very high house prices but I don’t think we should allow the tail of central London to wag the dog of this policy.”

Earlier this month, Lloyds chief executive António Horta-Osório described the Help to Buy mortgage guarantee scheme as a ‘game changer’ which would boost house building.

However, the mortgage guarantee scheme has attracted critics since it was first mooted in this year’s Budget.

In April, MPs on the Treasury Select Committee slammed it as ‘horrendous’ economics which would make the government an active player in the mortgage market for the foreseeable future.