Interest-rate rises could have a crushing effect on first-time buyers who face being hit by growing repossessions.
The Royal Institution of Chartered Surveyors says FTBs will feel the pinch of rate hikes in the coming months but buy-to-let investors will continue to meet their mortgage repayments.
Rics says that with affordability at the worst levels since 1992, FTBs will slip behind in their mortgage repayments to a greater extent than BTL investors, following the recent shock base rate rise from 5 per cent to 5.25 per cent.
The fears come as the Council of Mortgage Lenders this week revealed arrears and repossession figures for 2006.
RICS economist David Stubbs says: “January’s surprise interest rate rise is likely to soften new buyer enquiries in the coming months but those buyers who have already taken the housing market plunge could find mortgage companies knocking at their doors in the near future as affordability conditions bite.
“BTL investors will be less at risk from repossessions in the coming months. Older, wiser investors are likely to ride out periods of interest rate rises looking to the benefits of long term capital growth rather than short term rental income.”