Rate changes have minimal impact on niche lending

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Latest news in the UK for December 2006 covering the financial news sector.

Research by UCB Home Loans has shown interest rate changes have had a limited effect on niche areas of lending.

The research showed 85% of brokers expect house prices to be higher at the end of next year, whilst 10% think they will remain static.

However, the rate of price increases is expected to fall. Of those questioned, 43% thought prices would increase at a slower rate, whilst 38% thought the rate of increase would be about the same as this year. Faster price rises were expected by 17% of brokers.

Only 15% of brokers thought recent increases in interest rates had affected the self-cert sector, with the remaining 85% saying they had not. Almost a third (30%) said self-cert business had increased over the past four months, and a further 58% said it had stayed the same.

In the buy-to-let sector, a higher figure of 40% of brokers thought interest rate changes had affected the market, whilst 60% said they had not. A third (33%) said that buy-to-let business had increased over the past four months and 42% said it had stayed the same.

Keith Astill, managing director at UCB Home Loans, said: "Brokers are expecting house prices rises to slow down next year, which is a pretty reasonable assumption.

"Latest figures from Nationwide show that average house prices increased by 9.6% in the year to the end of November - somewhat higher than many people imagined would be the case, particularly when we consider the fact that the base rate has now risen to 5%.

"However, despite the fact that rate rises have had some effect on the self- certification and buy-to-let sectors, the majority of brokers are still reporting that business has been growing."