Homeowners in Britain were spared higher mortgage costs today after a "knife-edge" decision by the Bank of England kept interest rates at 4 per cent.
Analysts believe the vote was a close call as the bank's rate-setting committee balanced concerns over soaring house prices and consumer debt levels with the need to keep the economic recovery on track.
Despite the reprieve, experts warned households that a quarter point increase in interest rates was almost certain next month.
The bank has increased its base rate twice in the last five months, although it has stressed the need for a gradual approach to raising borrowing costs.
Today's decision suggests that the Bank of England still thinks that inflationary pressures remain subdued despite the recent economic upturn. Inflation is at 1.3 per cent - well below the target of 2 per cent, although the bank must base its interest rate decisions on a two-year horizon.
At the same time, mortgage lending and consumer credit remains high, and figures from the Bank of England showed that homeowners withdrew a record £16.19 billion sterling in equity from their properties during the final quarter of 2003.
In contrast, the manufacturing sector is still not out of the doldrums with industry experts fearing the impact of a rate rise on sterling.