Doom mongers are saying that further rises in base rate to 5.75 or 6 per cent this year could trigger a house price crash similar to that experienced in the UK at the beginning of the1990s.

Such predictions are enough to send a shiver down the spine of anyone who lived through that cycle of the housing market. At its peak, 75,000 homes were being repossessed by lenders each year because borrowers had fallen behind with their mortgage repayments.

Today the economic environment is very different. With high employment and a buoyant economy, the two clouds on the horizon are the threat of inflation spiralling out of control and a shock rise in interest rates beyond 6 per cent.

Ernst & Young’s Item Club warned today that people had become “overly relaxed about risk” and that we are “spending as if it was going out of fashion.” But mortgage experts insist that talk of a house price crash is alarmist and premature.

Ray Boulger of mortgage brokers, John Charcol, says: “For there to be a house price crash, there has to be a trigger and the only one I can foresee is if there were to be a sharp rise in interest rates over a short space of time.

“I expect we will see the rate of house price inflation slow down in the second half of 2007, with small falls in the early part of 2008, but only in certain parts of the country.”

Nick Gardner, press office at mortgage brokers, Chase de Vere Mortgage Management, agrees. “I don’t see a crash coming as long as interest rates remain affordable.

“People forget that interest rates are still historically very low. They averaged 10 per cent in the 1980s, 9 per cent in the 1990s and for most of this decade, people have been able to get a fixed rate at less than 5 per cent.

“In February this year, 87 per cent of first time buyers opted for a fixed rate mortgage so they are insulated from any rises for the next year or two at least.”

Even today, it is possible to get a fixed rate for 5.14 per cent with Abbey, although most lenders have moved their fixed rates to around 5.5 per cent. Alliance & Leicester has a two year deal at 5.44 per cent and a three year deal at 5.59 per cent, both with an arrangement fee of £599.

Another driver of the mortgage market is the army of buy to let landlords who have plenty of equity in their portfolios to continue gearing up and who see no sign of a fall in demand for rented property, thanks to net immigration, young people postponing their first house purchase and the trend to smaller households.

However, those who are over committed or who are on variable rate mortgages will no doubt suffer some pain over the coming year. But there are short term solutions to their plight, such as switching to an interest only mortgage or lengthening the term of their loan.

Either way, I don’t see a housing crash myself, although certain parts of the country which have seen excessive house price increases in recent months (Northern Ireland, Edinburgh and central London) may see a slight fall back over the coming year.

But having negative equity in your home for a short while is not the end of the world. After all, providing you don’t need to sell, it’s only a paper loss.