First time buyers 'could be boosted by income prospects'

01-Jun-2007

First time buyers looking for a way to keep in touch with the rising house prices could find themselves given a helping hand by rises in household income, it has been advised.

The Council of Mortgage Lenders' (CML) monthly market commentary has suggested that positive prospects for both employment and household income suggest that the economy remains fundamentally healthy.

However, countering such prospects is the feeling that the Bank of England may be seeking to consciously limit activity in the housing market as a way of compensating for strong performance in other sectors, the CML has noted.

"It does appear that higher interest rates are being used to bear down on activity in the more interest rate sensitive parts of the domestic economy, of which the housing market is perhaps the most important, to offset this unexpectedly strong activity elsewhere," the report advised.

Interest rates could hit six per cent in the near future, a senior economist at the Royal Institution of Chartered Surveyors advised yesterday.

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