Homeowners have been given a boost after the Bank of England ruled against raising interest rates this month.

The Bank's Monetary Policy Committee decided to hold rates at 5.75% after a month of turmoil in financial markets and signs of easing inflation.

Homeowners have been hit by five hikes in interest rates since August last year, which have added around £80 to monthly repayments for those with a £100,000 mortgage.

The announcement comes hot on the heels of recent evidence that suggests the rate hikes are beginning to bite.

According to the Royal Institution of Chartered Surveyors, home repossessions led to a 32% increase in houses offered for auction in the second quarter of the year.

The increases have also had an impact on the housing market, with prices increasing by 0.4% during August - just half the pace of the previous month, according to Halifax, Britain's biggest mortgage lender.

However, economists are predicting that rates could still reach 6% by the end of the year.

Global Insight's UK economist Howard Archer warned that the MPC is concerned over long-term factors such as firms' pricing confidence and oil prices, and needs harder evidence of a slow-down in consumer spending before relaxing its monetary policy.

He said: "There is still a distinct possibility that interest rates could eventually reach 6%.

"While the Bank of England will obviously carefully monitor events in the credit and financial markets, this will not in itself prevent the Bank from raising interest rates further if inflationary pressures prove to be sticky over the coming months."

In a statement accompanying its decision, the Bank said: "It is too soon to tell how far the disruption in financial markets will impair the availability of credit to companies and households.

"The MPC is monitoring closely the evolution of both credit spreads and the quantities of credit extended, alongside all other data relevant to the outlook for inflation."

The Bank added that there are "tentative signs" of a slowing in consumer spending and that it expects CPI inflation to remain around, or just below, the 2% target for the next few months.

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