Speaking to the Treasury Select Committee, governor Mark Carney accepeted that the housing market is picking up, but denied suggestions that lenders were behaving recklessly.

He reminded MPs that total current mortgage lending is still only running at three-quarters of its historic average.

He said: “”There is some room,” adding: “It is important that underwriting standards are maintained.”

The Bank’s most senior economists also suggested there could be more forward guidance to come on the future of interest rate movements.

Asked about buy-to-let lenders’ restrictions on longer-term tenancies, he said he welcomed the decision by Nationwide to take a more flexible approach. However, he added it was a matter for institutions:

“From a landlord’s perspective it makes the uncertainty of servicing any mortgage that much higher if you have a longer-term tenancy.”

In a rebuttal to MPs’ suggestions that the Bank of England’s forward guidance on interest rates is hard to understand, he said the businesses he spoke to understood the main points:

“They understand the core thrust of the policy, which is there is going to be exceptional monetary stability.”

The governor, who was head-hunted by George Osborne for the role, mostly kept his cool under questioning. However, when Labour MP John Mann suggested he was selective in his use of statistics, Carney said he was “more than mildly offended”.

Carney’s colleague and fellow Monetary Policy Committee member Charlie Bean stressed the Bank of England will not automatically raise the Bank Base Rate when unemployment hits 7%, the threshold identified in the Bank’s August forward guidance.

He said it could be “perfectly sensible” to issue more guidance at that point based on a 6.5% unemployment rate:

“I am not saying changing the existing guidance but there may be guidance that comes after.”