The governor of the Bank of England, Mervyn King, has refuted the suggestion that the £50bn deal for mortgage lenders is designed to kick-start the market through liquidity at all but is merely designed to aid confidence in a industry devoid of it. He emphasised that the offer was not planned to stimulate mortgage lending at all and that it would be a mistake to return to the super-low rates and easy lending of the past year.

Despite not being the targeted and intended outcome of the loan scheme Mr King did comment that homeowners should benefit somewhere down the line.

“There is the need for an adjustment in the mortgage market,” he said.

“But I do think the improved confidence in the banking sector, which I think this scheme will eventually restore, will feed through to borrowers and we'll see the mortgage market operating on a more normal basis.”

The governor then had to defend accusations by George Mudie MP that he did not have any sympathy with struggling homeowners in his approach.

He said: “I am not in favour of attaching political objectives to central bank operations,"

Mr King later faced questions about the most common measure of inflation, the CPI, and how it does not adequately factor in the true increase in costs that homeowners face. Mortgage repayments are not currently included in the measure despite rent being a part.

"I would like to see CPI include house prices in some form," he told the committee of MPs