Interest rates rise unlikely to dent market

Interest rates rise unlikely to dent market

Last Week's announcement of a 0.25 per cent interest rate rise by the monetary policy committee has placed rates at their highest for five years. The decision has been taken to keep pace with the continued growth of the British economy. This afternoon's MPC statement said: "It is likely that inflation will rise further above the target in the near term, but then fall back as energy and import price inflation abate."

Reacting to the rise, housebuilders Linden Homes expressed doubt that it will have a significant impact upon the housing market, due to strong investor presence and first-time buyers grouping together or seeking helps from their families.

Phil Davies, chief executive of the building firm, warned against further rises in December or January, however, saying: "The continuation of the upward trend next month or in the new year would price the vast majority of first time first-time buyers out of the market altogether."

The Royal Institution of Chartered Surveyors (Rics) has welcomed the rise in rates which it says has occurred in a "timely manner". It has petitioned for a rise in recent weeks in a bid to promote stability in the housing market.