Mortgage Rates Hold Steady Amid Falling Inflation
The latest inflation figures have brought a welcome drop to 2%, but what does this mean for mortgage rates? Despite the fall, experts predict that the Bank of England will not cut interest rates just yet.
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Inflation has been a major concern for the Bank of England, which has been raising interest rates to combat it. However, with the latest figures showing a decrease, many had hoped for a rate cut. But experts believe that the Bank will wait until August to make any changes.
“Despite the welcome fall in the headline CPI figure, core inflation remains stubbornly high at 3.5%. This is well above the Bank’s target, and its rate-setters will want to see further improvement here before committing to a rate cut.” - Peter Stimson, Head of Product at MPowered Mortgages
The Bank of England’s decision will have a direct impact on mortgage rates, which have been steadily increasing over the past few years. With the average two-year fixed residential mortgage rate currently at 5.97%, and the average five-year fix at 5.54%, any decrease would be a welcome relief for homeowners and would-be buyers.
Image: David Burrows
The current election campaign has also been cited as a reason for the Bank’s caution. With the outcome of the election uncertain, the Bank may be hesitant to make any drastic changes to interest rates.
“The future path for inflation – and so rates – will be impacted by whoever becomes prime minister and how their fiscal policy shapes up. It’s highly likely the Bank will want to wait to see the outcome of the election and the final economic plans before making that first cut.” - Laura Suter, Director of Personal Finance at AJ Bell
As the situation unfolds, one thing is certain – the Bank of England’s decision will have far-reaching consequences for the mortgage market. Stay tuned for further updates.
Image: Inflation Rates
What do you think about the current state of mortgage rates? Share your thoughts in the comments below.
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