British householders faced higher mortgage repayments today after the Bank of England lifted interest rates to 5 per cent - the highest level in five years.
The move by the Bank's Monetary Policy Committee (MPC) had been widely expected as policymakers look to keep a lid on inflationary pressures.
The quarter of a percentage point increase was as good as sealed by the Halifax after it reported a 1.7 per cent rise in October house prices earlier today.
Interest rates are now at their highest point since August 2001 and come amid evidence that more households are folding under the strain of higher overheads, such as council tax bills and energy prices.
A record 27,644 people became insolvent during the summer, fuelling forecasts that more than 100,000 people could go bankrupt or take out individual voluntary arrangements (IVA) in the year as a whole.
Today's decision is likely to cost homeowners with an £80,000 mortgage an extra £13 a month if lenders decide to pass the full cost on to borrowers.
Economists have suggested rates could rise again in February if inflation - currently at 2.4 per cent - continues to exceed its 2 per cent target and the economy is left with little spare capacity.
Vicky Redwood, UK economist at Capital Economics, said: "The key question is whether we see another rise early next year.
"Either way, with interest rates 50 basis points higher than six months ago, it could be a contributing factor to deterring people from entering the housing market over the next few months."
The MPC is jittery about inflation as it has lingered above its 2 per cent target for five months, despite September's rate dropping from 2.5 per cent to 2.4 per cent on the back of cheaper petrol prices.
PA