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Does today's inflation figure mean anything for fixed mortgage rates?

Journalist: Callum Mason, i

ended 14. February 2024

Today's inflation figure (4%) is slightly lower than the 4.1 or 4.2% that economists expected.

Will this likely have much of an effect on fixed mortgage rates? Will they start to decrease again after recent upticks? Or stay steady for now?

13 responses from the Newspage community

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Stephen Perkins
Managing Director at Yellow Brick Mortgages
Today’s static inflation figure is great news for borrowers, especially after the increases in the US that had everyone predicting ours would go the same way. This will give some calming confidence to the Bank of England to not need to push back any plans for reducing the Base Rate and lenders should feel comfortable with their current rates, having seen a few increases over the last week.
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Rohit Kohli
Director at The Mortgage Stop
Whilst this mornings inflation figures are more positive than expected the road to receovery is very fragile and lenders have been inreasing rates over the last couple of weeks as a result of the growing uncertainty from the resultant swap rates hikes. We are unlilkley to see a continuation of the price war until swaps stabalise and start to fall again and I think this mornings figures mean base rates will be held for longer than originally anticipated.
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Darryl Dhoffer
Founder at The Mortgage Geezer
A hold on inflation is always welcomed, particularly when economists were saying we could see a spike - just need the SWAP rates to settle and reduce and we might see the back end of February - start of March with a return from lenders on reduced interest rates.
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Justin Moy
Managing Director at EHF Mortgages
I don't see any immediate changes to mortgages rates, as we have seen increases over the last few weeks due to some uncertainty creeping back into the markets. This may set us back a month or two in our quest to see base rate reductions, but the longer-term plan remains the same, with inflation due to hit 2% in the next few months (as promised by the Chancellor). Mortgage rates will continue to dance around the 4% range for a while just yet.
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Ranald Mitchell
Director at bad credit mortgage specialists Charwin Mortgages
On the back of slighly worrying US data, inflation figures flatlining in the UK is good news all round, however if Government figures reckon we're going to see the 2% inflation target acheived by April this year, there will need to be a significant cooling off. After a jittery few weeks in the SWAP markets, we might see signs of them settling down, and this could well translate into lower fixed rate mortgage pricing.
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Ben Perks
Managing Director at Orchard Financial Advisers
A stagnating rate doesnt feel like something we should be celebrating, but given the circumstances this is welcome news.
Many thought that it would rise and the financial markets had braced themself, so a levelling of rate should provide the stability that was needed.
I would hope that this will lead to rates staying steady for now and then a drop off in the weeks and months to come.
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Michelle Lawson
Director at Lawson Financial
Time will tell what the outcome would be but given lenders would have potentially priced in the forecast rise this could see interest rates come down other than for strategic reasons. This means a win for borrowers.
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Edward Checkley
Managing Director at Advias
The recent inflation figure of 4%, though marginally lower than the anticipated 4.1 to 4.2%, is indeed a piece of welcome news. This slight deviation suggests a potential easing of pressures on the recent upward trends in SWAP rates. Consequently, our outlook suggests that mortgage rates are likely to remain stable in the near term, with the prospect of rate hikes diminishing.

Given that the inflation rate is still a distance from the Bank of England's target of 2%, we anticipate the base rate to maintain its current stance at 5.25%. This scenario also implies that SWAP rates may continue to hover at their present levels.

In light of this, our advice to borrowers is to initiate mortgage applications sooner rather than later. Securing rates now provides an opportunity to benefit from better terms in the future, rather than facing potential rate increases by delaying. The current economic indicators advise against a wait-and-see approach, which has recently led many to enco
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Luke Thompson
Director at PAB Wealth Management
I do feel that these slightly better than expected numbers will potentially have an impact on the markets over the next few days. We may not see reductions but we could see SONIA rates starting to settle again whilst we wait for the next Bank of England interest rate decision.

These inflation figures do give the Bank a bit more breathing room as the expected drop in inflation is due when the effects of a further drop in the energy price cap take effect from April. However, they will still need to be wary the situation around shipping in the Red Sea area has the potential to cause havoc with supply chains and thus drive inflation again which could be a disaster for the already fragile economy.
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Gary Bush
Financial Adviser at MortgageShop.com
The Inflation Data showing no increase from 4% is the news that the population needs and will lead us to a Bank of England base rate hold again, at the next monetary committee meeting, and potentially bring about that very much-needed drop in rate in May. Having seen the all-important Swap rates increasing for the last week hasn't been a comfortable ride which has led to lenders changing their rates twice in a week in chaotic decrease-increase movements. The positive spin on this is that the latest UK inflation figure will inevitably return a positive feel to the all-important Swap rates in the next week, further driving UK fixed rates downwards. The mortgage rate war is not over, it seems it has been just taking a breather with more lender decreases to be announced shortly.
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Graham Cox
Director at Bridging Hub
The slightly better-than-expected inflation figures, unchanged from last month at 4.0 percent, gives hope that mortgage rates may start falling again soon. With the energy regulator Ofgem expected to cut the energy price cap by 15% in April, the Bank of England could hit its 2% inflation target by the Spring. We could see a base rate cut by May with more to follow later this year.
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Amit Patel
Adviser at Trinity Finance
Forecasters had expected a slight rise to 4.2% , but somewhat surpisingly UK inflation remained static at 4% in January, the same rate as in December. A real positive is food prices fell in January for the first time since September 2021. Core inflation - which excludes energy and food also remained unchanged at 5.1%.

I expect Jeremy Hunt and Rishi Sunak to annoucement that their plan has worked and they are the only credible option for the UK electorate at the forth coming election. Rachel Reeves will say they should both stop waffling!!!

The Bank of England will most likely keep base rate on hold and wait a while longer before announcing a rate cut. 2024 has been a bit jittery thus far with lenders announcing rate increases and rate cuts, swap rates need to stabalise before rates are more consistent.
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Peter Stokes
Director of Mortgages at Davidson Deem
Fixed rates had actually started to rise a little over the past few days, no doubt as a result of rising swap rates as well as lenders maintaining service levels at acceptable levels.
This morning the money markets have reacted well to the inflation figures, with shorter term swaps falling. Whether this is enough to tempt lenders into reveresing the recent trend of raising rates we will have to see. Personally, I think the fall in swaps is not enough to see rates come down, but it could well stop the trend of lenders raising rates.