Levels of debt being taken on by British households to fund increasingly expensive homes are creating a "risk" to financial stability, the Bank of England's deputy governor has warned.
The Bank took action last year to curb risky lending, by telling mortgage providers to limit the number of loans worth more than 4.5 times income to no more than 15% of the total.
The deputy governor for financial stability Sir Jon Cunliffe said that this "insurance policy" was still needed because of renewed signs of upward pressure on prices.
"Our concern is not so much about house prices, it is the chain between high house prices, prices growing faster than people's incomes, and people having to take out bigger and bigger mortgages and the debt that families then have relative to their income growth," Sir Jon told BBC Radio 4's Today programme.
"It is that debt-to-income (ratio) of British households that creates the risk.
"We took action last June. We put in limits on high debt-to-income that were in advance of where the situation is, to try to stop a problem developing. A number of other actions were taken by other authorities - the Financial Conduct Authority - on the housing market.
"The market cooled down last year. Prices stopped growing as fast as they have been, mortgage approvals came down. There are now signs the market is coming back up again.
"We are not seeing the sort of growth in momentum we saw this time last year, but given the high level of debt to income we have in the UK anyway, and the ability of this market to move very fast, this is something we need to watch and that's why we have left that insurance policy in place."
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