HOMEOWNERS were hit by another rise in the cost of borrowing yesterday after the Bank of England imposed the first consecutive interest rate rise for four years.

The bank's monetary policy committee (MPC), under pressure to impose a rise to cool the booming housing market, said it was raising rates by 0.25 per cent to 4.5 per cent - the highest level since November 2001.

mortgage advisor Clear Cut Mortgages said the rise would mean repayments for someone taking out a mortgage would rise to an average of 33 per cent of gross pay, the highest level since 1993, and up from 29 per cent last year.

But one property professional said he welcomed the rise. Mark Coulter, director of Chesterton North East, said: "The current property market is so inflated that a further increase in interest rates will bring a level of realism back to things.

"I expect that a rise as small as 0.25 per cent will bring buoyancy back into what is at risk of becoming a flat market, with vendors hanging out for unrealistic prices, reducing the level of transactions.

"I am fully supportive of this rise and believe it will be the best thing to happen to the North-East property market, despite opposition from other property professionals."

The Confederation of British Industry said the rise would do little to control spiralling house prices, which it said was due to lack of stock.

General Secretary of the Transport and General Workers' Union, Tony Woodley, said the rise risked throttling the fragile recovery in manufacturing.

But Alan Hall, North-East regional director of the Engineering Employers' Federation (EEF), said: "What manufacturers want more than anything is stability - on inflation and on interest rates.

"I am not saying that it is welcome, because it is an additional cost, but if they are talking about measured rises to ensure the economy stays on a stable course, I think that manufacturing will accept the rise.

"I don't think this small rise will stop the manufacturing revival."

The Institute of Directors said it believed consumers would respond to higher interest rates, partly because the total cost of servicing debt was relatively high.

James Rainbow, director and investment manager at North-East stockbroker Wise Speke, said: "At the beginning of the year, it was clear that the MPC didn't want to raise rates too fast because while consumer debt and the housing market needed restraining, other aspects of the economy - such as manufacturing - were only just showing signs of recovery. Now that there is evidence of a more widespread recovery, it is clear that the MPC can afford to raise rates in order to cool household debt and the housing market without upsetting the overall balance."

Martin Ellis, Halifax chief economist, said the latest increase should help to slow the housing market, but thought there was no chance of a house price crash.