LONDON --- British interest rates went up for the fifth time in less than year on Thursday, hitting a 6-year high of 5.75 percent as the Bank of England keeps worrying about inflation.

Borrowing costs for businesses and homeowners have now risen a total of 125 basis points since August last year and financial markets expect a sixth quarter percentage point increase soon.

"Consumers will probably be slammed by a further rise to 6 percent before the end of the year," said David Brown, economist at Bear Stearns.

The central bank blamed rising price pressures. Inflation would fall back to its 2 percent target this year but firms are still planning to jack up prices, the BoE said.

Thursday's increase had been widely expected after last month's 5-4 vote by the Monetary Policy Committee to keep rates at 5.5 percent. Governor Mervyn King was among those calling for a rise -- only the second time that the central bank head has been on the losing side of an MPC vote.

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Details of who voted for what at the MPC's July meeting won't be available until minutes are released in a couple of weeks. Economists said this would be key to figuring out how many more rate rises were in the pipeline.

"We judge that (MPC members) Paul Tucker and Kate Barker are more likely to have joined the minority of hawks in June compared with David Blanchflower, Rachel Lomax or Charlie Bean," said Alan Castle, UK economist at Lehman Brothers.

TROUBLE AHEAD

Lomax, the deputy governor for monetary policy, raised the prospect last week that another rate rise may be overdoing it.

House prices are still rising fast and consumers are still spending for now but that there are warning signs that this could soon end.

More than a million homeowners may soon face significantly higher mortgage payments as two-year fixed-rate deals, taken out in 2005 when borrowing costs were at 4.5 percent, come to an end.

That could hit hard when total household debt is already at a record 1.3 trillion pounds, disposable incomes are falling and the savings rate has slipped to its lowest level in nearly half a century.

"My mortgage goes up and we can just about cope with it now," said Kelly Soliss, a florist. "It's just mortgage, mortgage, mortgage. That's all it ever is."

Britain's new finance minister Alistair Darling is worried. His predecessor, Gordon Brown, has enjoyed a bounce in opinion polls since becoming prime minister last week but this could evaporate if the housing market turns or consumer mood sours.

"What you don't want are people to suddenly find that their outgoings have gone up quite dramatically," Darling said in a newspaper interview published on Wednesday, less than a week after he took charge of the Treasury.

Personal bankruptcies are already at record levels and Britain's financial watchdog sounded the alarm on Wednesday that lenders and brokers are not doing enough to check that customers can repay loans.

Britain's biggest retailers such as supermarket giant Tesco are also complaining that people are not spending like they used to as higher borrowing costs clobber their purchasing power.

"I'm mortified because we only changed our mortgage to variable rate about four months ago," said Pepita Simpson, a civil servant. "We're up to 6.2 percent, I think. God only knows what it will go up to. I'm horrified."

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