As the Bank of England meets to decide interest rates a leading mortgage lender has predicted that pressure for a rate rise is likely to fall.

The Halifax, one of the High Street's biggest lenders, published statistics on Wednesday showing house prices rose by 0.4 per cent in March.

The average property now costs £102,227.

Though annual house inflation fell by 0.9 per cent to 16 per cent, the Halifax said it was too early to say whether this was the start of a slowdown in price rises.

It predicted that the current growth would slow as consumer confidence fell back because of higher unemployment and weakening consumer confidence.

A knock-on effect is that this would cut pressure on the Bank of England's Monetary Policy Committee to increase rates in the short term.

Property prices are predicted to finish 2002 about seven per cent higher than January, two per cent up on its original forecast of five per cent for the year.

Gary Styles, head of group economics for the Halifax, said: "Our economic assessment is that house price inflation will ease over the course of this year as higher unemployment and weaker income growth reduces consumer confidence."

Fears of a rate rise grew, however, when data published on Tuesday showed that UK manufacturers had recorded their best performance for more than a year.