Cunliffe was speaking to the BBC in the wake of the Bank’s measures to put a 15% cap on the number of mortgages banks and building societies can offer those borrowing more than 4.5 times their income.
He said: “We see a risk coming from the housing market.
“As house prices go up faster than the amount of money people earn the only way people can buy is to take on mortgages at higher and higher rates compared to what they earn and then debt in the economy goes up, and that leaves the economy quite vulnerable to shocks.”
He added: “We can’t control the housing market.
“In Britain we don’t build as many houses as we need to for the people who want homes and the Bank of England can’t do anything about that.
“What we can do and what we must try and do is to stop that pressure on house prices leading to higher mortgages relative to what people are earning that leaves people vulnerable when there’s then a crash.
“If lots of people in the economy are vulnerable in that way, if they’ve got high mortgages, when bad things happen to the economy they cut back.
“They cut back on their spending really sharply and that hits the economy as a whole.
“One of the reasons the recession we’ve had has been so deep and so painful is because we were carrying large amounts of debt.”
Cunliffe’s comments are consistent with his boss Governor Mark Carney, who has expressed caution at high loan-to-value lending.