In spite of the continued threat of further interest rate rises being introduced before the end of the summer, the Halifax has announced that it has raised its house price inflation forecast for the second half of 2007.

Citing a greater shortage of supply than initially expected as well as continued growth of the UK economy overall, the lender put up its forecast from four per cent to six per cent, though this is still below the eight per cent average of recent years.

"While house price growth was stronger than expected during the early months of 2007, there are now more signs that the market is slowing," said Martin Ellis, chief economist at the Halifax.

"We expect this trend to continue. House price inflation should ease over the second half of the year."

At the same time, the Nationwide has confirmed that it is maintaining its original forecast that house prices will grow by between five and eight per cent over the course of 2007, seeing no evidence to dispute the expectation.

Commenting on the Nationwide's position, its chief economist Fionnuala Earley, said: "We are confident that our original forecast published in December 2006 is still on track and we expect the rate of house price growth to fall from 11% now to around the middle of the five to eight per cent range."