(1888PressRelease)
May 16, 2007 - Fionnuala Earley, Nationwide's chief economist, believes the latest results for house price inflation mean an interest rate rise is inevitable - even though this could have devastating consequences for homeowners already struggling with affordability.
Nationwide's house price index reveals house prices have risen by 0.9 per cent in the last month - increasing the UK's average house price from £177,083 in March to £180,314 in April.
Annual change is also up - and back into double figures - from 9.3 per cent in March to 10.2 per cent in April.
"The Bank of England held off raising rates at the beginning of April, but the acceleration in house prices during the month makes a rate rise on the MPC's 10th anniversary look like a certainty," Ms Early speculates.
Despite this, Ms Early believes that previous interest rate rises are now starting to cool the market.
"While the monthly rise in prices is stronger than the MPC would have liked to see, it can take some comfort from the fact that the underlying trend is softening and the return to double-digit annual growth largely reflects a weak period this time last year," she said.
"The three-monthly growth rate, which smoothes the volatility of the monthly series, is still cooling in response to the earlier rises in interest rates."
National Homebuyers is the UK's leading quick sale property company and director Julian King adds: "If you look at interest rate predictions, they seem to be rising more each month.
"We said at the beginning of the year that there is no doubt that rates will rise to six per cent by the end of the year.
"If Gordon Brown has his way it would be even higher and we believe that rates will rise to 7.5 per cent in the next 12 months."
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