Mostafa Saleem, a researcher at the London School of Economics, said: “This raises the spectre that if the price increases are too high, and if local banks refuse to take them on, then the government could be forced to take back control in order to prevent a run on the banks.

“But this could backfire, and perhaps the riskier the riskier it would be.”

Housing, property, car loans and credit cards are three areas where Mr Osborne is determined to reduce what he deems wasteful spending, though he has not specified an overall cap on mortgage lending.

The Treasury is already exploring the possibility of imposing a financial transactions tax on individuals holding a mortgage, as was done in the US, but this would take time to implement. In the meantime, Mr Osborne is pushing to reduce the cost of loans for investors, as well as cutting payments on mortgage debt, something that is likely to be difficult to implement by the Conservatives.

In its latest analysis, the thinktank said household debt levels – defined as the total value of borrowing held by households – totalled around £1.45tn in the first quarter of this year, up from £1.31tn in the first quarter of 2008.

The report comes on the back of the chancellor’s decision to cut taxes for wealthy households by about 2 per cent a year to support a deficit reduction plan, which may also be a way of keeping interest rates low in the longer term.

The Treasury is also expected to set aside £4bn to create the so-called Universal Credit, the housing benefit policy which is already being rolled out in four areas across the country, including the DWP administration in Cardiff, Wales.

It could also be more flexible in handing out housing benefit to the 1.5 million unemployed people that are not job-seeking, or those who do have access to work such as students.