This is reinforced by the latest research released by The Woolwich today, which shows a two per cent decrease in consumer confidence in the housing market. This is the first time confidence has slipped since December 2003.
The Woolwich monthly index for June shows a dip to 65 per cent of homeowners believing their property will continue to increase in value. Confidence peaked at 67 per cent in May.
Andy Gray, head of mortgages at Barclays and The Woolwich, said: "This drop in confidence was inevitable. The combination of two consecutive monthly rate rises and Mervyn King’s warning to prospective homebuyers of a potential fall in the housing market has undoubtedly unsettled the market a little.
"With two further interest rate increases predicted this year, the next in August, we would expect consumer confidence to gradually decline as people become more cautious about future borrowing decisions. This position should level out by the end of the year."
This month’s Woolwich consumer confidence index does however still suggest that overall confidence is relatively high when compared to the same time last year. In June 2003, 56 per cent of homeowners were confident the value of their property would increase compared to 65 per cent in June 2004.
Barclays and The Woolwich anticipate a further 0.50 per cent interest rate rise by the end of this year and would advise consumers to review their finances in light of future increases.
