Mark Carney and James Benford, his private secretary, at No 10 yesterday

House prices would fall by 35 per cent over three years after a chaotic no-deal Brexit, according to a stark briefing given to the cabinet by the Bank of England governor yesterday.

Mark Carney told senior ministers that spiralling mortgage rates would cause a crash in the housing market.

He was briefing the cabinet on the Bank’s preparations for the aftermath of leaving the European Union next March without a full withdrawal deal. He outlined the Bank’s modelling on the EU agreeing a skeleton deal, in which a few ad-hoc arrangements would be reached, and a worst-case chaotic exit.

In the latter case sterling would plunge, driving up inflation and interest rates, he told ministers. Mortgage companies would also pass on higher-risk premiums to customers.