Varying responses to the Bank of England MPC's quarter percentange point rise - to 4.75% - suggest there are still mixed opinions about the prospects of a property crash.
Analysts and economists had anticipated the rise by the Monetary Policy Committee, as consumer borrowing is still strong and house prices are continuing to climb.
This is the fourth rate rise by the BoE since November 2003.
However, representatives at the Institute of Directors had earlier this week hoped for a 50 basis point rise to stem inflationary pressure as executives believe this will not discourage consumers from further spending, or slow the housing market sufficiently.
Today, Graeme Leach, chief economist at the IoD decision says raising interest rates by a quarter point was "sensible given current conditions".
"The Monetary Policy Committee's decision to raise interest rates by 0.25% was driven by three considerations.
"First, concerns regarding the knock-on effects of house price increases (housing wealth) on household consumption.
"Second, concern that measured GDP growth doesn't reflect the real impact of the increases in public spending (because of the difficulty in measuring public sector output).
"Third, that inflation may be at a turning point asthe output gap (spare capacity) disappears and the effects of higher oil prices ripple out across the economy," adds Leach.
Charcol's Ray Boulger says there are signs the BoE's 'softly softly' approach is beginning to impact.
"It came as no surprise that the MPC chose to increase Base Rate today despite the fact that house price inflation appeared to slow down in recent months. This slowdown gave the impression that Mervyn King’s comments on the housing market, combined with rate rises in two consecutive months, were having the desired effect of dampening rising property prices.
"Although both Nationwide and Halifax reported stronger house price inflation in July compared to June, proving that you can not judge the market based on a few months activity, it is worth noting that these figures mainly reflect transactions agreed between mid May to mid July."
He adds: "However, elsewhere there are tentative signs of a slowdown, and while the effect of recent rate rises have yet to fully filter thorough the system, the MPC’s softly, softly approach may yet pay off. Regardless, with the fundamentals remaining benign, we still firmly believe the housing market is in for a soft landing."
CML director general Michael Coogan continues:
"The Monetary Policy Committee members have recently made a point of emphasising that it is not in the business of 'clobbering consumers'. Equally, we all recognise that it needs to address inflationary pressures as it sees them. So the rate rise is no surprise.
"We continue to think there will be further rate rises to come, and that consumers should organise their finances to be able to cope with them. But we do not expect that the housing market will still be regarded as a significant inflationary pressure looking ahead into 2005. Nor do we expect that there will be a significant worsening in arrears and possessions figures in 2005 with the benign economic backdrop," concludes Coogan.
At the other end of the scale, Nick Booker from property investment website In2Perspective.com says the BoE has brought consumer "ever closer to a property crash".
“A rise in rates to 4.75% means Mervyn King has just snatched £1.25bn from UK homeowners pockets.“If rates go above 5% the affordability of the property market will reach a point that it has never reached before without going on to crash. The London property market is now at breaking point and the rest of the country is close behind.
“The property market is about to cross a threshold that has previously only been passed in 1973, 1981 and 1989. All of those years are famous for the property crashes that followed,” says Booker.IFAonline
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