First-time buyers told now a good time to buy

AS the European Central Bank (ECB) shows no sign of hiking interest rates, first-time buyers are being told now could be a good time to buy despite the possibility that property prices have not yet bottomed out.

The ECB left interest rates on hold yesterday at their record low of 1%, which came as a welcome relief to those on tracker mortgages.

Director with the Professional Insurance Brokers’ Association (PIBA), Rachel Doyle, said first-time buyers who want to get a foothold in the property market might be well advised to move while some long-term fixed rates are still reasonable.

“Even if property prices may not have reached the bottom, delaying in buying could mean that interest rate increases could work out more expensive than the benefit derived from a further drop in property prices,” she said.

Like many analysts, Ernst & Young expects interest rates to remain at 1% until early next year.

It said that by then the recovery should be better established in most eurozone countries to allow them to cope with higher interest rates.

Chief economics adviser with Ernst & Young, Marie Diron, said: “The ECB faces difficult months ahead, as it will want to tighten liquidity provision while the economic environment remains volatile and uncertain.

“While the still sluggish and hesitant recovery would point to low inflation over the next two years, the latest data showed a significant rise in eurozone inflation, at 1.5% in April, the highest level since the end of 2008.

“This rise was largely accounted for by energy prices.”

ECB president Jean Claude Trichet resisted pressure from investors to take new steps to fight the eurozone’s spreading fiscal crisis.

Mr Trichet said the ECB didn’t discuss buying government debt yesterday and that Spain and Portugal don’t have the same challenges as those faced by Greece, which needed an international bailout last week. European officials should instead intensify efforts to cut budget deficits, he said.