Interest rate hikes 'dangerous for whole market'

Posted: 13 Jun 2007 17:22:46 GMT

Concerns have been expressed over the long-term health of the property market, should interest rates increase further this year.

Concerns have been expressed over the long-term health of the property market, should interest rates increase further this year.

Responding to mortgage cost figures released by the Council of Mortgage Lenders (CML) yesterday, the chief executive of Allied Surveyors Robert Bryant-Pearson said that higher interest rates were not only posing problems for financially-stretched homeowners and first-time buyers.

He said that further interest rate hikes could endanger the entire health of the property market.

"Current interest rates are already at a dangerously high level, with a repeat of the misery of the 1991 -1992 property crash only a few rate rises away," Mr Bryant-Pearson said.

"If home owners are stretched much further, a significant increase in repossessions is almost a certainty.

"The continued influx of first time buyers is essential for the future prosperity of the housing market. If the Bank of England continues to vote up interest rates they will drive out first time buyers, the life blood of the market - a move that would prove truly catastrophic for both the market and the wider economy."

The CML yesterday reported that mortgage costs had increased to their highest level in 15 years.

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