This month brought an unexpected jolt to the mortgage and property markets as the latest figures from the Office for National Statistics revealed that UK inflation rose to 3.5% in April, driven largely by a sharp increase in household bills.
The surprise has prompted a rethink from economists and lenders alike, with significant implications for those planning their next mortgage move.
What’s Changed?
Until recently, it was widely expected that the Bank of England would continue to reduce the Base Rate throughout 2025, following earlier cuts from 5.25% to the current 4.25%.
However, this new inflation data, coupled with continued wage growth is causing some economists to rethink the pace of further reductions.
Huw Pill, the Bank of England’s chief economist, has warned that the pace of previous cuts may have been too fast. He’s now calling for caution, even while confirming that the long-term direction of interest rates remains downward.
Lenders React
Barclays has now revised its interest rate forecast, predicting that the Bank of England will not cut rates in June, as previously expected. Instead, it now anticipates the base rate will fall to 3.5% by February 2026, a full year later than initially forecast.
This shift comes after the bank’s economists admitted the inflation figure “surprised us to the upside,” and that conditions no longer justify an immediate rate cut.
Two other lenders have also increased their mortgage rates, reflecting the growing caution in the market.
Why You Should Act Now
Whether you’re approaching the end of a fixed-rate mortgage or considering your next move as a homebuyer or landlord, it’s essential to be prepared for every scenario. Mortgage deals change fast, often overnight, and securing a competitive product now could save you thousands over the life of your loan.
Contact us today to discuss how we can assist you on 0208 364 3444 or click here to schedule a free consultation call.