Interest rate predictions are ‘major worry’ for borrowers

House prices will continue to rise as borrowers face increased affordability pressures to make secured loan repayments, an industry expert has suggested.

Chief UK and European analyst for Global Insight, Howard Archer claimed that Nationwide research which revealed a rise in property value over April "reinforces" his view that interest rates will rise next month, causing more consumers to struggle with debt management.

He added: "There is a very real risk that interest rates could rise further still after May’s widely expected increase, which will be a major worry to potential house buyers."

Rising house prices were attributed to increased interest rates and a slow in disposable income growth, causing "ongoing shortage of properties in many areas".

However, he added that demand for housing could lessen over the coming months as first-time buyers and existing homeowners struggle with secured loan payments and other property expenses.

Mr Archer also suggested that the introduction of home information packs in June could constrain building supply, which in turn may increase property costs.

Earlier this week, a Nationwide study indicated that property rose by 0.9 per cent over the course of April, compared to a 0.5 per cent rise in March.

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