Low interest rates 'to limit UK house price falls'

Nationwide Building Society today predicted UK house prices would avoid the hefty falls seen in 2008 despite buyer confidence being hit by government spending cuts.

The mortgage giant said the likelihood of low interest rates until late 2011 would help limit price declines, although it said the market would remain weak amid austerity measures.

Its forecast comes as Nationwide posted half-year results showing a 26% rise in underlying profits to £147m (€172m).

The group said its margins – which have been hammered by historic low interest rates – had now turned the corner and said this would drive “a strong upturn” in future profits.