Mr Rubinsohn said: “Historically, the number of major, consistent house price falls are few and far between and they are normally associated with a big economic downturn.
“But there are no guarantees that that scenario plays into the hands of first-time buyers. In downturns, people can find that their jobs are at risk, or that their wages don’t increase.” Younger buyers are often the group hit hardest by recessions.
Rising mortgage costs also mean it will still be more expensive to buy even if homes are cheaper. Analysis by Hamptons estate agents shows that a first-time buyer purchasing a typical £229,000 home with a 10pc deposit saw monthly mortgage payments jump from £877 to £902 when the Bank Rate was last raised to 0.75pc.
Thursday’s increase will push costs up to £928. This means that a first-time buyer purchasing now will pay an extra £612 per year than if they had bought at the beginning of March.
The rises in mortgage payments will be so large, a first-time buyer will still pay more even if house prices fall.
A rise in the Bank Rate to 2pc would push monthly payments to £983 even if property values dropped 5pc. This means a buyer would pay an extra £1,272 per year compared to if they had purchased in March.
Andrew Montlake of mortgage broker Coreco said: “Unfortunately the buyer group that will be most affected by rising rates will be first-time buyers.
“That is the stage where a buyer has a smaller deposit and needs the most borrowing power. They might find buying becomes out of reach.”
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