First time buyers receive 6% rate warning

31-May-2007

First time buyers could soon face an even greater task in purchasing their first property if comments from a senior economist at the Royal Institution of Chartered Surveyors are borne out in coming months.

Oliver Gilmartin has said that interest rates of six per cent are "now in sight" as the Bank of England looks to correct inflation levels.

Such a move would have the effect of levelling out supply and demand, he suggested.

"Supply constraints have started to loosen in recent months, with instructions picking up as higher rates put greater pressures on homeowners at the margins," Mr Gilmartin advised.

"Inflation concerns will see at least one more rate rise with six per cent rates now in sight which will equalise supply and demand imbalances in the market," he concluded.

Mortgage approvals are currently 16 per cent below their November 2006 peak, according to figures released by the Bank earlier today.

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