Interest rates are due to rise from a record low of 0.5 percent as inflation and unemployment figures continue to fall.

The expected rise by the Bank of England is likely to be rolled out in gradual stages in early 2015 at around 0.25% at any one time.

Proposed as a way of cooling the over-heated housing market in London and the South-East, a rise in Britain’s interest rates is hoped to stabilise house price growth. Currently at their lowest rate in three centuries, the rise is inevitable but will affect mortgages primarily. Unless you have a fixed rate mortgage, your monthly repayments will increase, leaving interest only and tracker mortgages most vulnerable. Borrowers on standard variable rates will be subject to their banks response, but are likely to pass on their costs to consumers.

Ed Church, Partner in Strutt & Parker’s Canterbury office says: “Paying back more will impact on the disposable income of households. I would advise homeowners to set aside savings and go through your outgoings to ensure you are ready for any climb in your mortgage repayments.”

However, interest rate rises might not be all doom and gloom for the long term property market. Church continues: “We believe that an increase in mortgage rates will encourage many sellers who are sitting on the fence at present, to become more focussed on their sale. This will would bring in more supply from enthusiastic, committed sellers and in turn encourage more market activity.”

“The current national market is quite tightly defined by certain areas where demand outstrips supply and is driving house prices up. But there are also many areas, not only outside the South-East, that need supply to be improved by more motivated sellers.”

Stephanie McMahon, Head of Research at Strutt & Parker, also agrees that the rate rise might benefit the long term housing market. McMahon explains: “We expect higher interest rates and the ongoing toughening of lending parameters will deflate the property balloon as the era of cheap money comes to an end.”

“Over the next two years, we predict to return to an increasingly ‘normal’ market - where prices paid are more closely aligned to employment confidence, wage growth and housing fundamentals. This shift is likely to see prices decline in some areas.”

Church continues: “Before a rate change comes into place, if your property is sensibly priced and carefully marketed now would be a good time to sell your home while market confidence remains high.”