The formal consultation finishes on 1 October, but lenders are expected to act within the spirit of the law from today.

The Treasury confirmed the changes to the Help to Buy scheme would affect just 1.3% of total mortgage lending and under 5% of all Help to Buy guarantee loans.

The Treasury plans to consult on these changes with participating lenders and “minimise the impact on existing mortgage applications within the scheme.”

With 2,000 Help to Buy loans completed in May, this brings the total number of homes bought using the scheme to 22,831 since its launch in April 2013.

The Chancellor has asked the FPC to review the Help To Buy mortgage guarantee scheme in September to advise him on whether the key parameters of the scheme, including the price cap and the fees charged to lenders, remain appropriate.

This follows lending curbs by Halifax and Nationwide this week to stop lending shared equity deals for second-time buyers, although first-time buyers remain unaffected.

This follows the Chancellor of the Exchequer’s announcement earlier this month at Mansion House that any mortgage lending limits introduced by the Bank of England would also apply to all Help to Buy mortgage guarantee loans.

This commitment was welcomed by the Governor of the Bank of England. Meanwhile, the Financial Policy Committee’s Financial Stability Report, published today laid out proposals to prevent lenders extending more than 15% of new mortgages at LTIs at or greater than 4.5 x.

The Financial Policy Committee (FPC) said:

“Most lenders currently operate within its new LTI limit, it has introduced these new LTI limits to insure against potential risks to financial stability if mortgage lending standards were to loosen markedly in the future.”

The Chancellor of the Exchequer, George Osborne, said:

“I fully support this action by the Bank of England’s new Financial Policy Committee to use the new powers we have given them. It will help protect our hard-won economic security by better insuring us against any risks that might emerge in our housing market.

“In the years before the Great Recession the failure to do this cost families dear and took our economy to the brink. I gave the Bank of England these new powers because I’m determined that we don’t repeat the mistakes of the past.”