Homebuyers could face mortgage caps

George Osborne has announced that the Bank of England will be given powers to put a new limit on the amount of money that people can borrow to buy property to prevent a housing boom

Mr Osborne’s remarks will represent his most outspoken attack yet on Ukip, although he stops short of mentioning the party by name Photo: PAUL GROVER FOR THE TELEGRAPH

By James Kirkup, Political Editor

5:00PM BST 12 Jun 2014

Homebuyers could face a new cap on the size of their mortgages after George Osborne moved to slow down Britain’s booming property market.

The Bank of England will be given the power to put a new limit on the amount of money that people can borrow to buy property, Mr Osborne announced.

The Chancellor made the announcement as he conceded for the first time that rapid rises in house prices could destabilise the entire UK economy and derail the recent recovery.

House prices are rising at more than 10 per cent a year in some parts of the country, and a growing number of economists is warning of a bubble that could lead to financial instability.

Mr Osborne will outline his plans for new limits on borrowers’ loan-to-income ratios in a speech at the Mansion House in London later tonight.