The Bank of England has voted to leave interest rates unchanged at 4.75 per cent.

The decision comes amid growing predictions that the house price boom has come to an end.

In some areas prices are falling, with the market cooling in most of the country.

Business had also expressed fears that any further interest rate could damage the fragile recovery in UK manufacturing.

Recent data showed that factory output had slowed to its lowest level for over two years.

But the Bank is also concerned that consumer borrowing is continuing to rise and is likely to push up rates after Christmas if there is any sign of festive excess.

Less cash

With mortgages having risen recently consumers are finding they have less spare cash to play with.

Bank governor Mervyn King wants to see consumers regulating their expenditure rather than increasing borrowing.

He fears that consumer spending is too closely linked with the rate of increase in house prices - leading people to use equity to fund high street spending.

Vince Cable, the Liberal Democrat Treasury spokesman, warned the government that many homeowners were now uncertain about the future.

"People want to know that their homes are secure in uncertain times," he said. "The Bank is caught between dealing with the weaknesses in the economy, and curbing the consumer boom."

Expected

Whilst the MPC is still adopting a softly-softly approach, the City has already priced in at least one further modest increase in base rates.

Business welcomed the latest rate decision but still expects a further increase early in the New Year.

The Institute of Directors said there was still room for one more quarter point rise in this economic cycle.

"The monetary policy committee has gone into hibernation for a couple of months, but it's very likely to wake up with a growl in the New Year," Graeme Leach, IoD chief economist, said.

"There is now clear evidence the UK economy is slowing in response to the increases in interest rates over the past year, but we agree with Mervyn King that this is no time for hubris or complacency over inflation."

Trade unions said they hoped the Bank would hold back on any future rate rise.

TUC chief economist Ian Brinkley said: "There was no reason for an interest rates increase this month and there are good reasons for them not to rise in the near future.

"Prospects for manufacturing have dipped. And house prices appear to be starting to fall."