Giving evidence in front of the Treasury Select Committee, Carney said the Bank would first look to vary the terms of its four-and-a-half times income multiple cap introduced last month.

Carney said the Bank had acted early by implementing the cap, which he described as ‘insurance’ against a return to reckless lending, so that the impact of this measure could be monitored before any ‘clear and present’ danger.

If thought necessary, Carney said the current 15% allowance of high loan-to-income (LTI) lending could be lowered, or the muliple could be changed if all lenders began lending at the top end of the range.

Outside of the current measures in place Carney raised the possibility of a cap on loan-to-values (LTVs), although he added he had not seen a marked increase in high LTV lending.

He also suggested increasing the amount of capital lenders must hold against mortgages.

But Carney said he wanted it to be clear that the Bank was not currently contemplating any additional measures.

The danger of household indebtedness is seen to pose two risks. The first is the direct risk to banks and building societies caused by borrowers’ inability to repay their loans and the second was the risk to the wider economy, which he said was bigger.

“We are trying to address the indirect risk […] from indebtedness that is cohorts of highly indebted families and the macro-economic consequences of that,” he said.

“History shows that the British people pay their mortgages, they have very low default rates on their mortgages. But what happens to borrowers on high income multiples is that the have to economise on everything else to pay their mortgages.”

Carney said this lack of disposable income would have a knock-on effect on the wider economy and could tilt the country back into recession.