Many homeowners are facing a 'significant' shock in the coming months as they experience a sudden leap in their mortgage bills, the Bank of England’s housing expert has warned. Daily Telegraph

Kate Barker, the Bank’s expert on the property market and a member of the Monetary Policy Committee, also warned that house price inflation will probably fall well behind earnings growth in the coming years - slowing the wider economy.

In an unusually downbeat speech, Barker said that, despite these 'significant shocks' facing the economy, “the strong upward inflation pressures in the UK today make it difficult to argue for large reductions in Bank Rate to reduce this downward risk”.

At the top of her list of threats facing the economy is that the crisis in financial markets sets off a vicious circle, pushing mortgage costs higher, which in turn sends house prices lower.