Mark Carney, governor of the Bank of England (BoE) says interest rates may have to rise this year to stem booming house prices.

In a speech last night, Mr Carney said the increase could take place sooner than current market expectations, although analysts say increases will be gradual so as to prevent shocks.

Interest rates sit at an all-time low of 0.5 per cent, meaning it is generally cheaper to borrow money and less worthwhile saving.

Rates were cut to insulate the UK from the global economic pinch which started in 2007 and caused a recession in the UK.

Now the recovery is in full swing with all indicators pointing to faster growth, lower inflation and lower unemployment levels.

Mr Carney said there was "already great speculation about the exact timing of the first rate hike" and added that arguments for and against a rate rise were “becoming more balanced”.

Economists say a rate rise in likely in the first half of 2015.