Mortgage Rates: The Pain Continues for Homeowners

The latest inflation figures have dealt a blow to homeowners hoping for an early interest rate cut. With the Consumer Prices Index (CPI) measure of inflation falling to 2.3% in April, experts warn that mortgage rates could stay higher for longer.

Inflation rates have remained higher than expected, dashing hopes of an early interest rate cut.

The Bank of England’s decision to hold back on cutting interest rates has significant implications for homeowners. With the average two-year mortgage deal currently sitting at 5.93%, and five-year deals at 5.5%, according to Moneyfacts, the prospect of a delay in interest rate cuts will be disappointing for many.

“It feels as though a cut [in June] now seems very unlikely. Even a cut in August is looking a bit more doubtful,” said Paul Dales, UK chief economist at Capital Economics.

The impact of higher mortgage rates is not limited to tracker and variable mortgages, which tend to follow the base rate. Brokers warn that fixed-rate mortgages will also be affected, as lenders will be less likely to reduce rates in the near future.

Mortgage rates have eased back a touch in recent weeks, but today’s figures may well hold back the chance for that to become a stronger trend.

“Today’s figures may bring some disappointment for those looking for signs of an imminent cut to base rate,” said David Hollingworth of L&C Mortgages. “The figures are at the higher end of forecasts and could see expectation for base rate to hold at a higher level for longer yet.”

The delay in interest rate cuts will have significant implications for homeowners, particularly those on variable rate mortgages. With the Bank of England base rate currently sitting at 5.25%, its highest level in 16 years, mortgage prices have remained high.

The Bank of England base rate currently sits at 5.25%, its highest level in 16 years.

As the Bank of England Governor, Andrew Bailey, has stated, the Bank needs “more evidence that inflation will stay low” before rate cuts can come. With inflation rates remaining higher than expected, it seems that homeowners will have to wait a little longer for relief.

What does this mean for you? If you’re a homeowner, it’s essential to review your mortgage options and consider locking in a fixed rate. With the uncertainty surrounding interest rates, it’s crucial to stay informed and plan ahead.

Review your mortgage options and consider locking in a fixed rate to avoid uncertainty.

In conclusion, the latest inflation figures have dealt a blow to homeowners hoping for an early interest rate cut. With mortgage rates likely to remain high for longer, it’s essential to stay informed and plan ahead.