The Bank of England has announced a ¼% rise in the base rate, taking the rate to 5%. This follows a similar increase in August. Mervyn King, the Governor of The Bank of England is on record as saying that these rises were essential to control an upward swing in the rate of inflation.

Obviously many factors will have been taken into account before this decision was made, including reports that Britons are running up unprecedented levels of personal debt. There have been reports in recent days that the level of personal insolvency are reaching record levels, and indeed 27,644 people declared themselves insolvent between July and September – an increase of 6.5% over the figure for the previous quarter.

This has been linked with the continuing buoyancy of the house market in most parts of the UK. Prices rose by around 5% in the first half of the year and that figure will probably have been seen to have increased somewhat by the end of the second half.

But Michael Fiddes, Head of the Rural Division of property specialists Strutt & Parker says, a ¼% rise in interest rates will have little to no effect on the quality country house market. This market is far more likely to respond to any dramatic changes in the economy and with the current general lack of supply of quality country houses; the promise of large city bonuses and continued inward investment from outside of the UK the prospects for top end property remains good.

“However the mass market is affected by confidence issues and by the perception that if you don’t buy today you won’t be able to tomorrow. I would expect the rate rise to take a little of the steam out of this level of property.”

The ¼% rise in interest rates will mean a repayment of an extra £14.27 a month on a £100,000 mortgage which tracks the base rate. Mr Fiddes adds, ‘This is hardly onerous and is not going to tip a home-owner into re-possession. Certainly at the higher end of the market, where Strutt & Parker operates, this rise will go completely unnoticed.

“The property market is seeing slow, steady price inflation but the market is stable and there are absolutely no signs of a slump. Interest rates are still relatively low, plus employment is high and confidence in the City of London is very good. Talk in the press of a crash in the property market in 2007 is in my view completely without foundation.’