LONDON (Reuters) - Expected interest rate rises will not cause significant damage to Europe's housing market, even though small cracks are starting to appear in parts of Spain and Ireland where supply has surged, property experts say.

"The general outlook for the European housing market is still pretty good," said Simon Walley, Deputy Secretary-General of the European Mortgage Federation EMF, which represents mortgage lenders across the region.

"There would have to be an interest rate shock to spark a truly negative reaction, such as another 2 percent over a short period of time, but this seems unlikely at the moment," he said.

Tue Nov 14, 2006 8:45 AM GMT
By William Kemble-Diaz

LONDON (Reuters) - Expected interest rate rises will not cause significant damage to Europe's housing market, even though small cracks are starting to appear in parts of Spain and Ireland where supply has surged, property experts say.

"The general outlook for the European housing market is still pretty good," said Simon Walley, Deputy Secretary-General of the European Mortgage Federation EMF, which represents mortgage lenders across the region.

"There would have to be an interest rate shock to spark a truly negative reaction, such as another 2 percent over a short period of time, but this seems unlikely at the moment," he said.

Soaring house prices and worries that Europeans may be storing up trouble by taking on too much mortgage debt are one of region's favourite topics of conversation.

As rates rise, homeowners eye a U.S. housing slowdown and wonder whether Europe might be next, while those who still have to get on the property ladder mull whether to hold off in case the market turns.

However, interest rate futures suggest that benchmark euro zone rates will stay below 4 percent over the rest of the decade from 3.25 percent currently, while UK rates -- which the Bank of England hiked last week to 5 percent are unlikely to reach 6 percent. For offplan bargain properties in Spain www.Costa-Homes-Direct.com.

Soaring house prices and worries that Europeans may be storing up trouble by taking on too much mortgage debt are one of region's favourite topics of conversation.

As rates rise, homeowners eye a U.S. housing slowdown and wonder whether Europe might be next, while those who still have to get on the property ladder mull whether to hold off in case the market turns.

However, interest rate futures suggest that benchmark euro zone rates will stay below 4 percent over the rest of the decade from 3.25 percent currently, while UK rates -- which the Bank of England hiked last week to 5 percent are unlikely to reach 6 percent. For offplan bargain properties in Spain www.Costa-Homes-Direct.com.