'Mortgages will remain affordable'

Mortgage interest rates could remain affordable until the middle of this decade, claim industry experts.

The latest Ernst & Young ITEM Club forecast has predicted that the current historically low interest rates of 0.5 per cent could stay in place until at least 2014.

This will mean that more buyers will be able to afford mortgages, if they can first produce the right-size deposit.

Commenting on the auditors' report, Savills' director Lucian Cook said that there was likely to be a shift in how people approached buying properties.

He commented: "You have got a housing market which has traditionally been run on the ability of people to service a mortgage � that has really underpinned how much they are able to spend and to bid on a property and that has affected house price growth."

However, buyers could now find themselves locked out of the market because of the initial cost of a deposit.

"In the current environment, it is not whether they can service the mortgage; it is whether they can raise the deposit to move. There has been a shift from mortgage interest affordability to deposit affordability," Mr Cook added.

Posted by Luella Ravelin

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