STAND by for an increase in home repossessions in York and North Yorkshire should there be an interest rates rise next month.

That is the stark warning today from Kevin Hollinrake, joint chief executive of the York-based Hunters Property Group, which employs 220 people across 13 northern offices.

He believes that with the pound passing the US $2 mark last Thursday, it is now "extremely likely" that the Bank of England will raise interest rates to 5.5 per cent next month.

This increase, which would be the fourth since last August, could add a further £40 per month to a £200,000 mortgage, leading to yet more difficulties for many homeowners who are struggling to keep up their payments.

Mr Hollinrake, said: "Inflation has now reached its highest level in more than 14 years and it seems almost certain that we will see an interest rate rise next month.

"This is bad news for anyone with a mortgage, and could even lead to a further rise in home repossessions. Were the base rate to rise half a point to 5.75 per cent, the increase could be as high as £80 per month for those with a £200,000 loan.

"Homeowners and those investing in residential property need to be prepared and take this into account when arranging any new mortgages and by reviewing their current mortgage deals."

He warned that, anyway, the market would soon suffer the impact of Home Information Packs, the equivalent of a house MoT, which become compulsory when selling a home from June 1.

He said: "This will cost home sellers £1 billion per annum across the UK and will certainly have an influence on market conditions.

"We believe that the current legislation is ill-conceived and poorly prepared. It is one more burden that the market could well do without in the current climate."

An interest rate increase would, he warned, undoubtedly have a greater impact on the northern property market.

He said: "It was reported that London saw prices rise by £13,000 on a typical property in March, taking the average asking price to £379,846, with most homes selling within two months.

"The picture is very different in Yorkshire. The higher end of the market continues to see price increases, especially in popular locations such as York. But in Leeds city centre supply is now exceeding demand for the first time in many years and rate rises would hit this property market hard, especially for those with buy-to-let properties.

"The northern property market has already seen a slow down and this would further widen the north south property divide.

"An interest rate rise now will further upset the fine equilibrium that had been reached in terms of supply and demand in many northern towns and cities."