The chief City regulator, the Financial Services Authority (FSA), has moved a step closer towards tighter regulation of mortgage lending.
By the summer of 2013 it wants new rules to be in place to prevent a return of the reckless lending seen in the middle of the last decade.
This will involve much closer scrutiny of a borrower's ability to repay.
The riskiest loans, worth more than the current value of the property being bought, will be banned outright.
Lenders will have to assume in their calculations that interest rates are higher than they are now when decide how much to lend.
The FSA says: "We are concerned that, as money returns to the market, firms will come under increasing pressure to consider riskier lending and will focus more on market share than maintaining lending standards.
"We need to learn the lessons of the past and act to stop poor lending practices re-emerging in the future," the FSA adds.
