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The measures follow a pledge by Prime Minister Gordon Brown to end reckless banking practices in the City.

The Financial Services Authority (FSA) is expected to force lenders to look much more closely at the ability of people to make repayments.This is likely to include checking spending habits and existing loan commitments.

A ban on self-certification mortgages, where borrowers do not have to prove their income, is also probable under the FSA's planned reforms.

Over the weekend, Mr Brown said: "I'm determined to end the reckless banking practices that have left so many of you worried about your household budgets. "So to give you a better deal we are taking extensive action to reform the whole culture of the financial sector and to protect and empower you, the consumer."

But the FSA is expected to stop short of imposing caps on the loan-to-value ratios and income multiples that lenders can advance to homeowners after consulting the industry.

Robert Sinclair, director of the Association of Mortgage Intermediaries, said: "House prices in the UK are affected by demand and a lack of supply much more so than elsewhere and house price bubbles are not caused by lax lending. "We do not believe that the regulation of mortgage products will have the desired effect. In fact, it will restrict consumers unnecessarily."

Commentators have also questioned how effective a ban on self-certification and fast track mortgages would be, as lenders are less willing to approve them in the current economic climate.

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