Eleven million homeowners are facing higher bills after the Bank of England raised interest rates to their highest for five years.
The Bank said the quarter-point hike in the base rate to 5 per cent was necessary to combat above-target inflation swollen by record increases in fuel bills.
People with a £200,000 mortgage will have to pay £30 more a month to cover the increase, on top of the quarter-point rise in August. Rates are now at their highest since August 2001.
Debt advisers warned that, although small, the increase would be enough to tip heavily indebted people into serious problems at a time of record bankruptcies.
For most, the rise will be an unwelcome extra cost as the cost of living seemingly outpaces inflation.
The cost of gas and electricity has soared by 37 per cent in the past year to more than £1,000 a year for an average family. Council tax and water bills have risen about 5 per cent. A record 27,644 people became insolvent this summer, leading to fears that more than 100,000 people will slide into bankruptcy or take out individual voluntary arrangements in 2006.
Economists warned that rates might have to rise several times - and as soon as February - to prevent inflation running out of control.
Yesterday, a survey by Halifax Building Society released hours before the rate decision showed house prices rose 1.7 per cent in October, the largest increase since the spring property boom.
In a statement accompanying its decision, the Bank of England's rate-setting Monetary Policy Committee said inflation was likely to move further above its target of 2 per cent in the near term because of "pricing pressures" before falling back as rises in energy bills and imports slow down.
The eight-member committee is worried about inflation because it has lingered above the 2 per cent target for five months, despite drifting down to 2.4 per cent because of lower petrol prices.
The Royal Institution of Chartered Surveyors welcomed the rate rise as necessary action to dampen the housing market and prevent economic volatility.
The estate agents Savills suggested the base rate might have to rise to as much as 6.5 per cent to tame house price growth.
However, the CBI said its research suggested no further rises were needed because consumer appetite for debt was plummeting and the economy was slowing.
Vicky Redwood, an economist at Capital Economics, said: "Today's decision was expected but the key question is whether we see another rise early next year. Either way, with interest rates half a point higher than six months ago, it could be a contributing factor to deterring people from entering the housing market over the next few months."
The Citizens Advice Bureau warned that some households could be "pushed over the edge" by yesterday's rise.
A spokesman said: "We know a lot of people are taking on mortgages that stretch them to the absolute limit so any increase in mortgage interest rates could spell disaster for people whose finances are balanced on the very edge of affordability."
The TUC said there would be "real anger" if companies faced higher debt payments because of an overheating housing market in the South-east "caused by the impact of top executive pay and mega-bonuses in the City".
Homeowners were advised by mortgage brokers to check that their lenders put rates up by no more than a quarter of a per cent
One in four homeowners believe they will struggle with the quarter-point rise, according to research this week by Bristol University. Its Personal Finance Research Centre said that, in reality, only 1 per cent would be badly hit. But it predicted the number in grave difficulty would increase by 1 per cent for every half per cent rise.
The Consumer Credit Counselling Service stressed the rise had to be put in "perspective". A spokesman said: "Although people are expecting interest rates to rise over a longer period this isn't going to be a key factor in pushing into debt. But we would still urge caution on people who are looking to take on new loans and mortgages."
The rising cost of living
(£150,000 loan, monthly payments)
(Unleaded, per litre)
Sources: Office for National Statistics, Moneyfacts, Energywatch, Ofwat, Department for Communities and Local Government, British Retail ConsortiumReuse content