The Bank of England has said it is ready to step in and ***** a housing bubble, saying that the number of borrowers being offered dangerously large mortgages is at an all-time high.

About one in ten are borrowing more than four times their income, the Bank said.

The BoE said that in the light of “increasing momentum”, it was preparing to take action if necessary.

In minutes of a meeting, it said: “Given the increasing momentum, the FPC (Financial Policy Committee) will remain vigilant to emerging vulnerabilities, will continue to monitor conditions closely and will take further proportionate and graduated action if warranted.”

While the “proportionate and graduated action” was not spelled out, BoE governor Mark Carney has previously warned of the risks of a house price bubble and said there was a need for vigilance.

One possibility is that the Bank could try to dampen the market by limiting LTVs on mortgages – for example, capping them at 80%.

The last minutes (March 19) of the FPC also revealed that banks are to be stress-tested against another “shock” in the housing market.