Mortgage rates to cool housing price index

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Mortgage rates to cool housing price index

Thu 10th Mar 2005

There is renewed speculation that the house price index is due to dip, this time as a result of mortgage rates.

It had recently been showing signs of stabilising but now some high street providers are increasing their fixed mortgage rates.

Their move has been prompted by murmurings at the Bank of England that interest rates are set to rise again.

"This should help to cool the housing market further. We have recently seen a sharp rise in money market rates which feed through to mortgage rates," said James Carrick, an economist at ABN AMRO speaking to Reuters.

"The Bank of England might not need to follow through with a rate hike...if the money market has already done the job for them."

Halifax, Abbey and Northern Rock are among the providers that have increased rates, some by as much as 30 basis points

The MPC has kept interest rates level at 4.75 per cent since last August but analysts feel more increases are imminent - but probably not this month.

House price rises have fallen away slightly in the last few months at a rate that commentators predict will result in a soft landing.

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