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Inflation data "great news for anyone with a mortgage"

ended 20. September 2023

UK inflation surprised on Wednesday, with headline CPI edging down to 6.7% from 6.8% in July and the closely monitored core inflation figure, excluding energy, food, alcohol and tobacco, also falling to 6.2%, down from 6.9% in July.

Samuel Mather-Holgate of Swindon-based advisory firm, Mather & Murray Financial, said simply: “This data is great news for anyone with a mortgage. Inflation was expected to increase this month, but both headline and core rates have reversed, giving the Bank of England reason to keep rates on hold as opposed to hike them again, as was expected. More mortgage rate cuts are now likely.”

Riz Malik, director of Southend-on-Sea-based independent mortgage broker, R3 Mortgages, agreed: “This data, especially the drop in core inflation, is very positive news ahead of the base rate decision on Thursday. In fact, rather than waiting until the end of the year, we could see a 'hold' decision sooner than we think, potentially tomorrow. You can also expect mortgage lenders to continue to reprice downwards, which is great news for borrowers.”

Malik's views were mirrored by Emma Jones, managing director of Frodsham-based independent mortgage broker, When The Bank Says No: "Following this data, hope is growing that mortgage rates may now have peaked, despite a potential 0.25% increase in the base rate tomorrow."

Meanwhile, Wes Wilkes, CEO at the Newcastle-under-Lyme-based wealth manager, Net-Worth Ntwrk, said “the sigh of relief from the Bank of England will no doubt be heard across the city and should be enough for a pause tomorrow”.

John Choong, equity and markets analyst at investing comparison platform, InvestingReviews.co.uk, also noted the August inflation print could see the Bank of England pause its rate hikes on Thursday: “On the back of yesterday's upwardly revised inflation outlook for the year, this cooler-than-expected CPI print will come as a relief. More encouragingly, core CPI, which the Monetary Policy Committee sees as more crucial in the medium term, dropped more than expected. As such, this invokes the possibility that the Bank of England's rate-hiking streak could end as soon as tomorrow.”

Rohit Kohli, director at Romsey-based mortgage broker, The Mortgage Stop, suggested the data could kickstart the property market: “This latest inflation data will hopefully boost sentiment and kickstart the property market.”

But Justin Moy, founder at Chelmsford-based mortgage broker, EHF Mortgages, sounded a note of caution: “Inflation is still over three times the Bank of England target, so inevitably a further 0.25% increase in Bank Rate will be announced this week, and if world oil production is not increased, inflation will start to increase again. It just shows how fragile everything is, so it's important that those with mortgage renewals due shortly have their new deal reserved, just in case we see another bounce in SWAP rates.”

Andrew Montlake, managing director of the UK-wide mortgage broker, Coreco, concluded: “Whilst the inflation battle is not won yet, this is a substantial advance and the Bank of England should pause from any further action to see if this trend continues rather than go too far and cause economic woe. I would expect to see SWAP rates continue to ease over the coming days which will give lenders more ammunition to escalate the rate war that has been brewing for the past few weeks. We have already seen the first fixed rates under 5% and we are now likely to see more choice at this level.”

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14 responses from the Newspage community

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Riz Malik
Independent Financial Adviser at R3 Wealth
The drop in CPI and core inflation has averted the migraine many were expecting due to the recent rise in oil prices. This data, especially the drop in core inflation, is very positive news ahead of the base rate decision on Thursday. In fact, rather than waiting until the end of the year, we could see a 'hold' decision sooner than we think, potentially tomorrow. You can also expect mortgage lenders to continue to reprice downwards, which is great news for borrowers.
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Samuel Mather-Holgate
Independent Financial Adviser at Mather and Murray Financial
This data is great news for anyone with a mortgage. Inflation was expected to increase this month, but both headline and core rates have reversed, giving the Bank of England the reason to keep rates on hold as opposed to hike them again, as was expected. More mortgage rate cuts are now likely. Although energy costs were higher, food and accommodation services pushed the overall basket down. This is exactly what Andrew Bailey and Sunak must have been wanting, as neither man could have enjoyed the pain they were inflicting on households.
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Emma Jones
Managing Director at Whenthebanksaysno.co.uk
Following this data, hope is growing that mortgage rates may now have peaked, despite a potential 0.25% increase in the base rate tomorrow. But nothing is guaranteed so if you are thinking of securing a deal now it may not be around for long.
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Justin Moy
Managing Director at EHF Mortgages
A surprising fall this morning, however small but certainly encouraging, and for mortgage borrowers it gives confidence that we are finally seeing a reaction to the multiple base rate increases. Inflation is still over three times the Bank of England target, so inevitably a further 0.25% increase in Bank Rate will be announced this week, and if world oil production is not increased, inflation will start to increase again. It just shows how fragile everything is, so it's important that those with mortgage renewals due shortly have their new deal reserved, just in case we see another bounce in SWAP rates.
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Craig Fish
Director at Lodestone Mortgages
The unexpected drop in inflation and core inflation is great news, albeit slow and steady. Tomorrow's expected increase in base is now no longer a given, and following recent commentary we may now even find ourselves at the peak. Let's just hope the MPC feels the same way, take their foot off the gas, just like motorists are having to due to increased fuel costs, and stop piling more pain on households and businesses.
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Rohit Kohli
Director at The Mortgage Stop
This fall in inflation should signal to the Bank of England that it holds interest rates at current levels. The positives are that food inflation fell faster than expected but with fuel increasing we may say an impact further down the road. The economy needs stability now so holding interest rates will allow this to happen. This latest inflation data will hopefully boost sentiment and kickstart the property market.
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Wes Wilkes
CEO at IronMarket Wealth
The surprise fall in inflation today, in particular the fall in the all-important core inflation number, will bring huge relief for homeowners, borrowers and investors. The sigh of relief from the Bank of England will no doubt be heard across the city and should be enough for a pause tomorrow. We’re still well away from 2% so there is more to do but a pause now would be sensible. Either way, this is a win-win for borrowers.
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Andrew Montlake
Managing Director at Coreco
This is a set of figures that many had crossed their fingers for and the fall in core inflation will come as a relief to Government and the public alike.
Whilst the inflation battle is not won yet, this is a substantial advance and the Bank of England should pause from any further action to see if this trend continues rather than go too far and risk causing economic woe.
I would expect to see SWAP rates continue to ease over the coming days which will give lenders more ammunition to escalate the rate war which has been brewing for the last few weeks.
We have already seen the first fixed rates under 5% and we are now likely to see more choice at this level.
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John Choong
Senior Equity Research Analyst at Investing Reviews
On the back of yesterday's upwardly revised inflation outlook for the year, this cooler-than-expected CPI print will come as a relief. More encouragingly, core CPI, which the MPC sees as more crucial in the medium term, dropped more than expected. As such, this invokes the possibility that the Bank of England's rate-hiking streak could end as soon as tomorrow. Nonetheless, there's still a long way to go before inflation returns to the BoE's 2% target. With oil prices shooting up in recent weeks, all eyes will be on next month's CPI inflation data to assess whether August's fall was a stroke of luck. Either way, the rate outlook will hang in the balance of where oil prices go in the coming months. Any further moves upwards could reverse the progress being made on inflation as oil tends to be a leading indicator. This could stoke further rate hikes and erase any prospects of a soft landing, plunging the UK economy into a recession. But for today, investors can pop their champagne.
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Graham Cox
Director at Bridging Hub
Core inflation falling to 6.2% from 6.9% in July is great news for homebuyers, as it's possible the Bank of England won't deem it necessary to raise the base rate on Thursday. Even if they do, it's likely mortgage rates will continue falling from their recent highs.
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Gary Bush
Financial Adviser at MortgageShop.com
After a lot of nail-biting before the release of the inflation figure, finally we have some good news that will surely allow the Bank of England to pause its base rate increase activity, helping UK mortgage holders.
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Peter Stamford
Mortgage Expert at Stamford Home Finance
The latest inflation data will be a sigh of relief for mortgage holders, as the Bank of England surely now has to consider pausing the continuous base rate hikes, possibly even starting tomorrow. This shift, reflecting a delicate economic balance, could usher in renewed confidence in the property market, which is badly needed right now.
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Amit Patel
Adviser at Trinity Finance
On the back of the CPI data released this morning, the MPC committee must now take stock and pause increasing the base rate. I expect to see further rate reductions from lenders over the coming days on the back of the news released this morning, which is positive news for borrowers who are looking to re-finance.
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Ross McMillan
Owner/Mortgage Advisor at Blue Fish Mortgage Solutions
Given the last 12 months, it's always a relief to wake up to positive inflation numbers rather than the opposite, but with the headline numbers still more than three times the Bank of England's target and given their steadfast focus on precisely this measure, it would be a surprise if one last push on the brake was not administered by Threadneedle Street tomorrow. All of this has largely been anticipated and factored in by the mortgage market and lenders so a dramatic deluge of rate reductions in the coming weeks isn't anticipated but the gradual trickle of lower rates being available seems set to continue and will bring welcome relief to many borrowers as we head towards the end of a turbulent year.