A proposed cap on mortgage lending, limiting how much money home buyers can borrow, has alarmed the NAEA, who say the move could be 'suicidal' for the housing market.

A proposal to limit how much banks and building societies can lend – restricting mortgages to just three times a buyer’s annual salary – is expected to be published by the Financial Services Authority this week. As part of a wide-ranging set of announcements for banking regulation following the near-collapse of the financial system, Lord Turner, chairman of the FSA, will also suggest a ban on 100% mortgages.

The suggestions in the Turner Review have alarmed estate agents and mortgage brokers, who have warned that the housing market needs support, not restrictions. Since the summer of 2007, the average house price has fallen by 20%, while the number of property sales has collapsed by 67%, according to the Land Registry.

Daily Telegraph