Oxfordshire homeowners have been left counting the cost after the Bank of England hiked interest rates to their highest level in five years.

The decision to push up the levy, by 0.25 per cent to five per cent, comes just as families were looking to start their Christmas shopping.

Now many will be forced to dig deeper after the rate rise, which will mean the interest on a £150,000 mortgage will cost about £30 more next month.

The rise came after it was revealed the number of people threatened with the loss of their home after failing to keep up their mortgage repayments has rocketed by a third.

Tracey Hazel, from Berinsfield, has already been forced to tell her four children not to expect too much at Christmas after she was forced to take sick leave from her job as a carer.

She said: "When I heard it on the new news, I thought 'oh no, not again'. All the bills seem to be going up at the moment and it is becoming more expensive just to live."

Mrs Hazel, who lives with painter and decorator husband Paul, and their children aged nine to 18, added: "We have already told the children it is not going to be a great Christmas this year. If we have the money, they can have it. If not, they are going to have to wait."

First-time buyer Bridget Taylor, 25, who has a flat in Wallingford, said: "I have spent so long shopping around for a mortgage, trying to get a deal I could afford, and now this happens."

Public relations executive Ms Taylor added: "I have used all my savings, but I just wanted to be on the property ladder."

Government figures reveal 423 possession orders were made in Oxfordshire between January and September this year, compared with 316 during the same period last year - a rise of 34 per cent. The average rise for the South East was 20 per cent.

A possession order does not necessarily lead to eviction, as homeowners get a final chance to negotiate with their mortgage lenders, but it is a sign that many are being pushed over the financial brink - a record 27,644 people across the country became insolvent during the summer.

Still going up

The rate rise is unlikely to slow down property prices in Oxford which have been soaring recently, according to estate agents.

Judith Durham, manager of Cluttons in the city, said: "It may just make people think a little more carefully, but this area is so buoyant with so many people wanting to buy that it's not going to have much of an effect. If it rose by another 0.25 per cent then it might slow it down but the mortgage companies are still offering some very good deals and a lot of people are taking out long-term fixed rate loans."

Yolande Barnes, director of research at Savills, added: "We think interest rates would have to rise to 6.5 per cent before the house price growth would start to slow."

But Oxfordshire business leaders are concerned. Christina Howell, head of external affairs at the Oxfordshire Chamber of Commerce, said: "The Bank of England must take into consideration the adverse impact that a rise in rates could have upon investment."