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Rate rise good news for first-timers, says firstrung.com

Firstrung.com says that the recent interest rate rise to 5.25% could be good news for first-time buyers wanting to get on the property ladder.

Paul Holmes, chief executive of Firstrung.com, says: “If house price inflation is now arrested as a consequence of three rate rises in quick succession then that is cause for some hope amongst first-time buyers.”

However, he adds it is too early to celebrate because the rate rise is a “defence mechanism versus the mismanagement of the economy in allowing a run on printing money to obscene levels at a time when interest rates were far too low for too long.”

Holmes says: “The effect has been a rise in asset prices due to speculation, which has in turn caused misery to a generation of priced out first-time buyers.

“We’re not suggesting that prices will be halved overnight or that first-time buyers are still not in for a very tough time over the next few years.

“What we are confidently predicting is that our own suggestion, that house price inflation will only reach 2% for the year, is well on track.

“Rates for first-time buyers will remain static, incentives will grow, lenders will recoup their losses from existing borrowers, who, in turn, will seek to change lenders for more competitive rates from more aggressive lenders aided by brokers chasing skinnier returns.

“And so the wheel will continue to turn rather than fall off the wagon that at times has actually looked out of control.”

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