Consumer confidence has dipped with many pessimistic about the prospects for the economy and employment in the first 6 months of 2007, said Nationwide on Wednesday.

But at the time Nationwide did their survey (in the weeks before Christmas), expectations on the housing market were more optimistic with expectations of future house prices rising in December to 3.2%, up from 2.9% in November. The increase brought consumer expectations back in line with those seen 12 months ago.

However, at that time expectation of another rate rise were patchy with February being the earliest predictions.  Yesterday’s surprise increase by the bank of England will have dented the only upbeat part of the survey somewhat and the next consumer confidence index, due out on the 7th February, will make interesting reading.

Most major payers in the housing industry report the Bank’s move yesterday as ‘premature’ with some going as far as suggesting the Bank had got it wrong.

Paul Smith, chief executive of haart said: “The current economic situation is not strong enough to justify a rise in rates. The housing market is stable and currently showing modest overall growth but the latest rise in interest rates could cause a substantial change in homebuyer attitudes and significantly dampen activity in the housing market.”

“The latest announcement is particularly bad news for first time buyers, who are finding it increasingly more difficult to get on the property ladder.”

Peter Bolton King, Chief Executive of the NAEA said: “The full effect of the rate rise in November is yet to be felt in the residential housing market. This shock decision from the Bank of England is clearly premature and extremely disappointing.”

“Whilst the early indications for 2007 are that the housing market is performing well, the vast regional differences remain a concern. The market in London and the South East of England continues to thrive, however segments of the market are much steadier in other areas of the country.”