The government could be set to step in and guarantee mortgage lending under plans worked upon between government official and bank bosses over the weekend.

The Bank leaders met at the Prime Minister’s country residence Chequers to discuss the possible implementation of the Crosby Report, which was published last November.

One of the key points for discussion could be a plan for the government to provide guarantees on mortgage securities. In effect, the Treasury would guarantee bank bonds that used home loans as collateral.

The Crosby report, put together by the former HBOS chief executive Sir James Crosby, suggests that the government could auction mortgage guarantees to the highest bidder and charge a fee to the eventual winner, on the condition that they would provide home loans to first-time buyers and not to remortgaging customers.