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Inflation and mortgage rates

ended 17. February 2025

This week we get the inflation data for January. The consensus is that inflation will rise from 2.5% to 2.8%. What impact could this have on the swaps market and, in turn, mortgage rates? Could it derail the momentum in rate cuts of the past fortnight or so? Deadline is tightish for this news alert - 1pm - as we will be issuing it to the media today. Video responses, if you find the time to do one, will be pinned.

3 responses from the Newspage community

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Editor
Ranald Mitchell
Director at bad credit mortgage specialists Charwin Mortgages
The anticipated rise in UK inflation from 2.5% to 2.8% will likely push swap rates higher, putting upward pressure on mortgage pricing. While the Bank of England remains cautious on rate cuts, inflation creeping up may reinforce lenders' concerns, making fixed-rate mortgages less competitive in the short term. Borrowers hoping for cheaper deals may need to wait longer, as volatility in the swaps market could stall the downward trend in rates we saw earlier this year.
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Editor
Stephen Perkins
Managing Director at Yellow Brick Mortgages
Inlfation is starting to creep back up, but forcasts show it is still far from the summit. With the National Insurance and minimum wage increases to impact from April there will be further hikes in inflation despite the Bank of Englands best intentions to save the economy and keep inflation closer to 2%. Since the recent Base Rate reduction there has been some minor downward pricing in fixed mortgage rates, but eventhough the vote and commentary seemed confident of future cuts above expectation, we have not seen rates snowball as we would hope.
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Elliott Culley
Director at Switch Mortgage Finance
SWAP rates have begun to tick up at the end of last week of the back of better than forecasted figures for the economy. With inflation predicted to rise, calls for further rate drops will go unanswered. If inflation is lower than forecasted then it may lead to a more positive change in SWAP rates, but right now expect rates to hold or increase rather than decrease.