Jones noted that the speech last week by Bank of England executive director for financial stability strategy and risk Alex Brazier was a warning sign from the regulator.

Brazier warned that mortgage lending was becoming cheaper and riskier, could pose a threat to the economy and noted that more regular check-ups on the banking sector were required than its current annual stress tests.

Brazier added that the bank would focus on the evolution of domestic risk appetite and would “keep standards up with the risks that are being taken”.

Speaking at the UK Finance annual mortgage lunch, Jones noted: “I think we need to be prepared,” he said.

“I think that’s what’s called smoke coming from the chimneys of the Vatican. So we should take note.”

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Lowest mortgage arrears

However, the head of the trade body also defended the policies being undertaken by lenders at present.

“The Bank of England’s Financial Policy Committee recently raised concerns about credit conditions in the mortgage market, and particularly about high loan to income ratio loans,” he said.

“But it is important to point out that a higher loan to income (LTI) ratio does not necessarily equate to riskier lending.

“In fact the evidence shows that the regions where high loan to income lending is most widespread actually have the lowest incidence of mortgage arrears. And, of course, all lending is underpinned by the Financial Conduct Authority’s responsible lending rules,” he added.

But in his speech last week, Brazier had warned that households with higher mortgage debts typically make cutbacks elsewhere in downturns to afford their mortgage payments.

And so the more high debt borrowers that were present in an economy tended to deepen a recession.