He criticised the practice of lending up to five times a mortgage applicant's income, suggesting a 'stable level' was up to 3.5 times.
A number of house price indices have suggested that prices have been rising in most parts of the country, but particularly in London.
The latest figures from the ONS found prices rising at an annual rate of 17% in the city in comparison with 8% in the UK as a whole.
Cable told the BBC: "In the short-run, the immediate problem is to stop this boom getting out of control" and that banks "must not throw petrol on the fire" by giving home loans that ran at high multiples of applicants' incomes, although he pointed out that the 'boom' was primarily being seen in the South East of England.
Aaron Strutt, of Trinity Financial, said:
"The Financial Conduct Authority has just completed the implementation of the biggest set of changes to the mortgage market in 10 years and the lenders are relying very heavily on mortgage affordability."
"Until house prices come down buyers will need more generous income multiples otherwise they will be forced to rent for longer or rely on the Bank of Mum and Dad."
