Mortgage lenders have revised their figures for house price growth this year substantially upwards, from a two per cent estimate in February to seven per cent.
The Council of Mortgage Lenders (CML) tripled its annual estimates following better than expected growth over the first five months of 2006.
This growth comes with several costs attached however, the CML warned, not least that it is one of the main factors in predictions of increasing interest rates.
An increase in the cost of borrowing would raise the costs of mortgages, removing many of the best rate deals that have helped to fuel the current resurgence in property growth.
“The immediate signs are that demand will remain robust over the next few months,” said CML senior economist Jim Cunningham.
“But we take the view that confidence and activity are closely associated with interest rate movements and expectations.
“The small rise in short-term interest rates expected in the second half of this year and the rise in fixed-term rates that we have already seen is likely to result in a modest fall in the level of transactions in the second half of this year, and we expect this to continue into 2007.”
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