The boss of Lloyds has warned that the UK government's Help to Buy scheme risks creating a dangerous house price bubble unless it is matched with a boost in housebuilding.
In the latest warning over the scheme, Antonio Horta-Osorio called for relaxed planning and building rules and more social housing projects so that rising mortgage approvals do not drive up house prices.
The Halifax owner is a major lender under Help to Buy, which was recently extended to include a government guarantee on high-risk mortgages, allowing people to buy a home with a deposit of just 5%.
"It is important that planning permits, building authorisations and social housing projects are liberalised so that the increase in mortgage transactions does not lead to a substantial increase in house prices," Mr Horta-Osorio said.
Lloyds' chief executive said the initiative needs "tweaking" to avoid overheating the market in the south east of England.
"The scheme should be focused outside London and the South East. In the rest of the country you have nothing close to a housing bubble,'' he added.
The warning came as the boss of Britain's bad bank said Help to Buy could speed up the repayment of its £42 billion taxpayer loan by lifting house prices.
Richard Banks, who runs UK Asset Resolution, which manages the loans of failed lenders Northern Rock and Bradford & Bingley, said this could help lift customers out of negative equity - where loans exceed the value of their homes.
"If house prices go up outside London, it is a good thing for us as quite a few of our customers are trapped by their high loan-to-values.If higher house prices mean sufficient customers are able to and choose to remortgage with another mortgage provider, it may facilitate UKAR being able to pay off the Government loan more quickly," he added.
Mr Horta-Osorio is the latest high-profile voice to highlight concerns over the scheme, following warnings from former Bank of England governor Mervyn King and the International Monetary Fund.
Recent official figures showed mortgage approvals running at a five-and-a-half-year high in August, while data from Nationwide showed house prices rose at their fastest annual pace in more than three years in September as the market revival spread across the UK.
Lenders including Halifax, Royal Bank of Scotland and NatWest have started offering mortgages under the scheme, while Santander, HSBC, Barclays, Virgin Money and Aldermore also plan to join it.
The scheme had initially not been expected to start until the new year but has been brought forward by three months.
It will offer £12 billion sterling in mortgage guarantees over three years and some estimates suggest 180,000 loans could be taken out under the initiative.