Further rate rises 'could be on the way'

28-Feb-2007

The Bank of England's monetary policy committee could increase interest rates to combat house price inflation, according to the chief economist at Nationwide.

First time buyers may be interested to read that Fionnuala Earley feels there a number of factors that could prompt this decision, including a decline in buyer interest and a low supply of new properties coming onto the market.

Ms Earley also said the lack of supply will impact on house price inflation, which "will remain firm for a while longer, before gradually easing".

The chief economist also highlighted the fact that the average house price is currently £174,706 - an increase of £16,000 on last year's figures for the same period.

To find out about the different ways of financing a first home, see our section ‘Affording Your First Home’.

Ms Earley's comments follow figures released by Nationwide which show that house price growth has reached "double digits" and that buy-to-let properties will continue to support prices across the marketplace in the "short-term".

Earlier this month, the building society announced that many first time buyers were opting for longer-term and interest only mortgages. Nationwide found that through choosing these products, some borrowers could save as much as £300 a month.

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