House price rises 'expected to slow'

02 October 2003
Northern Rock has predicted that house prices are set to slow within the next few months.

The mortgage lender expects house prices to fall back in line with the rate of earnings growth over the next nine months.

The company's forecast would reduce average house price growth to just over three per cent a year, down sharply from current leading analysts estimates of between 15 per cent and 19 per cent.

However, Northern Rock was quick to point out that demand for mortgages was unlikely to fall and suggested that steady economic growth and high levels of employment would prevent a slump in the UK property market.

The company also played down fears that a rise in interest rates would hit the housing market hard, saying that it was likely to have a "more noticeable impact" on unsecured loans and credit card use than mortgage demand.

Northern Rock reported strong growth in its mortgage lending business, with net residential lending for the first three quarters of 2003 up 41 per cent on the previous year.