House prices slowing down

26/07/2007

Nationwide Building Society reported that property prices increased by only 0.1 per cent during June and July 2007

Throughout the whole year, this month has been the slowest rise, simply due to interest rates rising.

Next week the Bank of England are looking to increase the interest rates further. Repayments on a £100,000 mortgage will cost borrowers an extra £80.

The Bank of England are looking to increase interest rates to 6 per cent, this will only cause first-time buyers and existing homeowners financial problems.

Chief economist Fionnuala Earley hinted additional rate raises could transmit the housing market to crash.

She added: 'The Bank of England now faces a tough balancing act in the months ahead, with tightening consumer finances on the one hand and resilient economic growth on the other.

'Household finances are under considerable pressure-and house prices and consumer spending will both see a slowdown in the second half of the year.'

Yesterday Northern Rock the reputable mortgage lenders warned that house prices could slow down towards the forth quarter of 2007. Adam Applegarth, chief executive said annual growth could decrease by 4 per cent.

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