[pound]198,915

House prices rose by 0.7 per cent in July, putting the average cost of a home in the UK at [pound]198,915, according to the Halifax.

It was the fourth month in a row that prices had risen by less than 1 per cent, the mortgage lender said - an indication that the market was slowing down. The latest increase pushed up the annual rate of house price inflation from 10.7 per cent to 11.2 per cent. At the same time, property values have climbed just 1.3 per cent during the past three months, the smallest rise since August last year.

"The five rate rises since last summer [are having] an increasing impact on household spending and housing demand," said the Halifax's chief economist, Martin Ellis. "High levels of employment and a shortage in the number of properties available for sale will, however, continue to support house prices."

The Bank of England sprang no surprises with its decision to keep interest rates on hold at 5.75 per cent last week. It started putting rates up 12 months ago after a year-long run in which it kept them at 4.5 per cent. The cost of borrowing is now more than 1 per cent higher than this time last year, and the pause in rate rises will be a welcome break for borrowers and homeowners with variable-rate mortgages, who are beginning to feel the pinch.

The decision by the Bank's Monetary Policy Committee (MPC) to leave rates on hold had been widely predicted. Most analysts expected it would want to wait and assess the impact of the previous five rises, but many still predict rates could go as high as 6 per cent - making this month's decision a temporary reprieve.

Barry Naisbitt, economist at Abbey, said: "If the MPC considers the risks to inflation to be sufficiently on the upside, a rise to 6 per cent could be on the cards in the next three months."

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