In an interview with the Daily Mail, Carney [pictured] said he is alert to the ‘damage’ that could be caused by uncontrolled mortgage lending and surging house prices.

He said: “I lived in the country in the late ’80s, 1990s, I saw the boom-bust cycle in the housing sector, the damage it can do, the length of time it took to repair. I’m very alert personally to this issue.”

House prices have soared recently, climbing 4.6% in the three months to July, the highest annual rate for more than three years.

The governor told the Mail that the Bank now has a “toolkit” to restrict mortgage credit and even raise the amount of capital that banks and building societies must hold to restrain home loans.

He said: “We have the responsibility to assess emerging vulnerabilities in the economy such as housing, make those assessments and recommend action.

“Interest rates are principally an instrument of monetary policy for achieving the inflation outcome and there are other tools that address risks.”

Carney also said that uncertainty over long-term plans for state-controlled Royal Bank of Scotland must end.

He told the paper that if Britain’s economic performance is to be improved ‘there has to be an increase in bank lending to new business with good ideas or existing businesses that have a good expansion plan’.