Now's a good time to buy a house

"We think that owning or buying a house is a good idea. Most people buy a house by taking out a mortgage. Having a mortgage on a house with inflation around the corner is not a bad thing."

Speaking at Tower's inaugural quarterly briefing he said inflation would be "one of the dominant themes for the investment world in 2011."

Despite predictions of interest rate rises as competition for borrowing increases, Stubbs said he believed mortgage rates would remain relatively stable.

He said banks remained committed to mortgage lending as their lowest risk form of lending.