Buy-to-let could support market through rate rise

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The housing market could remain buoyant thanks to buy-to-let mortgage sales even if interest rates rise next week, Nationwide has predicted.

Following the publication of its monthly house price report, the financial services provider noted an overall weakening of demand for residential purchases.

However, robust performance in the buy-to-let sector caused the firms chief economist Fionnuala Earley to predict buoyancy, even if the Bank of England raises the base rate of interest on March 8th.

Analyst Global Insight argued that figures from the past two months combine to hint at an overall weakening of the market.

In its response to the statistics, the firm stated that "The average [monthly] house price increase of 0.5 per cent in the first two months of 2007 is clearly down from monthly rises of 0.8 - 1.4 per cent range through the second half of 2006."

The company added that there is a "very strong chance" that the Bank will choose to increase interest rates beyond their current five-and-a-half-year high.

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