He accused New Labour of ‘incubating a culture of financial gambling with other peoples’ money’, resulting in a dangerous dependence on debt in Britain. As people were led to believe that property prices would remain ever-rising in the past, many secured thousands of pounds against the ‘illusory wealth of rising, vastly inflated property prices’.

The consequences of the Government’s carelessness, Mr Cable said, are visible now as millions of families struggle with their mortgage repayments, face negative equity or even repossession.

Still, he insisted that propping up mortgage lending and house prices in order to return to a market as it was a year ago before the credit crunch hit would be the wrong remedy.

He said: “The Government must not try to prop up house prices which have to fall back to a sensible level which makes housing affordable for ordinary families. It must not underwrite new mortgage lending by the banks. It is simply not acceptable to socialise losses and privatise profits.”

Calling for immediate action, Mr Cable urged the Government: “Lenders must be stopped from pushing thousands of families into homelessness through repossession. There has to be effective regulation to stop a repetition of the binge of irresponsible lending.”

However, he also called on property owners to be realistic and change their mind-set regarding the ownership of properties: “More fundamentally we need to confront our national obsession with property. Houses are homes to live in; not gambling chips.”

In order to encourage potential buyers back into the market, in the meantime several mortgage lenders have announced further rate cuts in their mortgage ranges.

The Woolwich has cut the rate on their Lifetime tracker mortgage to 0.89 per cent above Base Rate without any fees or early repayment changes which, according to Moneyfacts.co.uk is 1.18 percentage points better than the average two-year fixed rate mortgage.

It has also re-introduced fixed rate products for people with a smaller deposit with a loan to value ratio of up to 90 per cent.

Cheltenham & Gloucester have also announced a 0.12 per cent rate cut on their two-year fixed rate mortgage deals. The cheapest rate for available in their mortgage range is now 4.99 per cent for up to 75 per cent LTV, and 6.13 per cent for up to 90 per cent LTV.

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