The increase in house prices is still keeping economists and experts on the edge of their seats as they await the data in coming months.  What is being called unsustainable house prices is causing a cry for policymakers to act promptly when it is necessary to raise the standard base interest rate.  Any delay, they believe, could be detrimental to the recovery of the economy as there could possibly be a housing market crash without intervention of an interest rate increase.

The Confederation of British Industry (CBI), an organization representing thousands of British businesses, expects in the first quarter of the year at least a 0.25% increase added to the current 0.5% rate pushing it to 0.75%. 

The forecast for housing prices is that prices will increase by a total of 8.2% for the year and another 5.1% next year.  The economy is on a strong rebound with an expectation of further growth for the year and close to an equal level of growth next year of almost 3%.

John Cridland, CBI’s director general, said, “We have to remain alert to the risks posed by unsustainable house price inflation.

“Housing has come back under the spotlight as annual house price inflation figures have reached double digits on some measures.  While housing transactions are still running almost 30 per cent below their last peak in 2006, they are picking up steadily.”

The anticipation remains that lenders will react to the housing market and the strong demand by pulling back on their cheapest deals.  However, there are many attractive mortgage and remortgage deals to be found for those willing to shop around.