Interest rates hit 5%

The Bank of England decided in favour of increasing base interest rates, bringing the rate to 5%.

The decision has led to a mixed response from the housing industry. Philip Davies, chief executive of Linden said: "The interest rate rise was widely expected and the majority of homeowners had already priced it in, so I do not expect it to have a significant impact on the housing market,"

But SmartNewHomes.com MD David Bexon reacted with disappointment: "This rate rise could seriously dampen the housing market at this crucial time when it is slowly starting to show signs of growth. With predicted higher costs of transactions next year from HIPs, albeit slimmed down, a rate rise could send house prices into reverse and seriously damage buyer confidence.

"Recent growth has been restricted to London and the south east - it is not a national phenomenon. Affordability is a cause for serious concern and increasing mortgage rates will only exacerbate this situation."

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