With property prices rising by 278 per cent over the past decade, RICS has warned that any interest rates in 2007 could have a detrimental affect on the housing market, boosting the number of property repossessions.
Research by RICS revealed that over 8,000 properties were seized by lenders in the first half of 2006, the highest figure for five years. David Stubbs, senior economist at RICS, admitted that affordability conditions would worsen in 2007, impacting the first-time buyer market and leading to rising property repossessions.
Nick Gardner, director at Chase De Vere Mortgage Management, said: “It’s always worrying when we see a rise in repossessions. However, against a backdrop of record numbers in employment and increase in home ownership, it was inevitable that we would have some reaction against that. The only way it could go was down. With interest rates rising, that’s always a concern especially when people are only just making their repayments and are on variable rates. But I would hope any sensible brokers would have put those stretching themselves on a fixed rate. The change in interest rate is not so much a driver of repossessions. Whether repossessions increase by comparison to 2006 utterly depends on the way the economy goes.”
