Interest rates look set to rise next month following warnings that the value of new mortgages has doubled in six years.

Statistics from the British Bankers' Association have revealed that the average mortgage is now £112,000, more than four times the average salary.

The association warned a rise in interest rates would hit many people who would find it difficult to cope with a small rate rise and falling house prices.

It revealed the value of mortgages approved by banks last month rose by nearly 80 per cent to £12.4 billion, compared with £6.9 billion in September last year and £3.5 billion in September 2000.

Experts say buy-to-let mortgages, and not the re-mortgaging of the 1980s, which is propping up the market.

The chancellor's chief adviser, Ed Balls, has also signalled that the government will support a rise in interest rates as the global economy recovers.

He told the G20 conference that the government would allow "the full operation of the automatic stabilisers while the economy is below trend, because of our disciplined management of the public finances".

And the London Chamber of Commerce revealed that the swift end to the Iraq war and a boost in equities led to 38 per cent of businesses being positive about the next 12 months.

Minutes of the last meeting by the Bank of England's monetary policy committee revealed it only agreed by a one-vote margin to keep rates unchanged.

So the latest news that the housing market is still out of control and growth targets are set to meet chancellor Gordon Brown's predictions, means a rate rise is now increasingly likely.

There came a warning that the limit of investment gains from property would soon be reached and it was a question of when not if prices would tumble.

"Compared with the recent past, residential property is likely to be a much less attractive investment over the next two to three years," said Ed Stansfield, a property expert with Capital Economics.

"Even allowing for the recent recovery in equity markets, in relative terms, residential property is more expensive than at any time in the past 20 years."