Predicted interest rise may cause ‘payment difficulties’

House prices have continued to rise over the course of April, a new set of figures indicate.

According to a study by Nationwide, property rose by 0.9 per cent this month, in comparison to a 0.5 per cent increase in March.

As a result, the average price of a British home reached £180,314, which in turn could squeeze consumers’ ability to make secured loan repayments.

Chief economist Fionnuala Earley suggested that although interest rates are likely to rise next month, "too sharp" a hike could "undermine market confidence and dry demand up swiftly".

She also warned that this could "lead to widespread payment difficulties" for borrowers.

However, the research indicated that price growth could be slowing down, with the two per cent rise recorded between February and April reported to be the lowest three-month increase since August 2006.

The study also revealed the rising popularity of fixed-rate products, with such deals accounting for 76 per cent of house purchase and remortgage loans in February.

Earlier this week, a Halifax survey indicated buyers could find the cost of their secured Homeowner Loans increased as the average property broke the £100,000 barrier over the first quarter of 2007.

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