Spring brings no joy for first time buyers

31-May-2007

House prices continued to rise during May, according to the latest Nationwide Building Society survey, with the prospect of additional interest rate rises likely to stymie first time buyers' efforts to get onto the housing ladder.

The Nationwide research found that the monthly growth rate fell from 0.9 per cent in April to 0.5 per cent in May, echoing figures for April published yesterday by the Land Registry.

However, both studies reported an increase in the annual rate of growth, and Nationwide has advised that a modest change in mortgage rates and strong demand have meant that recent rate rises have as much of a cooling impact that they did in 2003-4.

Nonetheless, the May interest rate rises and the prospect of at least one further hike before the end of the year will see growth dampen further, the building society has suggested.

"However, higher interest rates, with the threat of more on the horizon, should signal caution to those thinking about stretching themselves to get a foot on the ladder," commented Nationwide chief economist Fionnuala Earley.

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

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