In a bid to prevent irresponsible lending there is a plan to ban 100 per cent loans in the UK.

The Financial Services Authority, according to reports, is considering the clampdown on banks as a result of the role reckless lending is believed to have played in the current credit crunch.

The amount people are able to borrow will, as such, be capped at 3.5 times their salary.

Chairman of the FSA, Lord Turner, yesterday outlined the idea in their report on banking.

Between 2005 and 2007, explained Lord Turner, the number of mortgages in the country offering borrowers more than 100 per cent of property nearly doubled.

Northern Rock’s Together loans was fingered as one of the most controversial, as it offered up to 125 per cent mortgages.

A startling revelation by Northern Rock recently was that these loans accounted for 30 per cent of its mortgages and that it also accounted for 50 per cent of its arrears as well as 70 per cent of its repossessions.

Meanwhile, critics have claimed that the move to restrict lending would shatter the dreams of young people planning on owning a home.