Copy article

Inflation up to 3.1% – what does it mean for savers and borrowers?

ended 16. September 2026

The Consumer Prices Index (CPI) rose by 3.1% in the 12 months to August 2026, up from 2.9% the previous month, ONS has said today.

Transport, particularly motor fuels, made the largest upward contribution to the monthly change.

Core CPI (CPI excluding energy, food, alcohol, and tobacco) rose by 2.6% in the 12 months to August 2026, unchanged from the 12 months to July; the CPI goods annual rate rose from 2.2% to 2.7%, while the CPI services annual rate was unchanged, at 3.4%.

  • What does this mean for borrowers?
  • What does this mean for savers?
  • How will mortgages be affected?

Responses asap.

6 responses from the Newspage community

Copy all

Copy

Pro
Rohit KohliVerified
Director at The Mortgage Stop
No surprise here. Fuel and energy costs are up and it's feeding straight into prices. The only positive is that core and services inflation haven't moved. That tells me this is largely an oil and energy problem rather than prices running away across the board, and it gives the Bank of England a strong argument to hold tomorrow. But a hold doesn't mean cheaper mortgages. Lenders have already moved, with rates going up over the last couple of weeks as oil spiked again. A Bank of England decision alone probably won't spark another round, but it's a clear sign that rate reductions aren't coming soon. So anyone holding out for cheaper mortgage rates could be waiting a while. If your deal ends soon or you're looking to buy, get advice now.
Copy

Pro
Ranald MitchellVerified
Director at Charwin Mortgages
This is not just an interest-rate story. Higher inflation also bites directly into mortgage affordability. As household costs such as fuel, food, utilities and insurance rise, lenders’ affordability models have to allow for more everyday expenditure, leaving less income available to support a mortgage. That can reduce borrowing power even if mortgage rates themselves do not move significantly. For some buyers, the amount they can borrow may fall at exactly the same time as their monthly living costs are increasing. We have also already seen mortgage lenders repricing upwards this week, so borrowers face a potential double squeeze, higher mortgage rates and tighter affordability. Savers may benefit from rates staying higher for longer, but they still need to ensure their returns are keeping pace with inflation.
Copy

Pro
Chris BarryVerified
Director at Thomas Legal
Inflation rises this time round aren’t going to move the dial immediately but what’s coming down the track could certainly be cause for concern.

Wage inflation is increasing and as a result, the state pension will outstrip inflation again thanks to the triple lock. This will snowball into an overall higher inflation figure through more people having more money which will almost certainly prompt the MPC to take action by increasing interest rates to take money out of the system from working people.
Copy

Pro
Tony SanchezVerified
Founder at Bridging Loan Directory
Borrowers should not assume that CPI at 3.1% means mortgage rates will automatically rise tomorrow. Existing fixed-rate mortgages will not change, tracker and variable rates depend more directly on Bank Rate, while new fixed-rate pricing is heavily influenced by swap rates and lenders’ funding costs.

The inflation increase does, however, make rapid rate cuts less likely. Anyone refinancing soon should not base their plans on a dramatic fall in mortgage rates.

Savers may benefit if banks keep rates higher, but inflation reduces the real return and tax can reduce it further, making it important to compare accounts and use available ISA allowances.

For property investors, higher-for-longer rates can also reduce the loan supported by rental income and make refinancing out of bridging finance harder. Recent Bridging Loan Directory reporting has shown how relatively small rate changes can create equity shortfalls or lead to costly extensions, so exit assumptions need reviewing early.
Copy

Plus
Jamie AlexanderVerified
Mortgage Director at Alexander Southwell Mortgages
Inflation ticking up to 3.1% is not a disaster but it is the wrong direction, and the timing matters. The Bank of England has been carefully managing expectations around rate cuts, and a number like this makes the next move harder to call. Markets will be pricing in a longer hold, possibly into next year.

For borrowers that means fixed rates are unlikely to fall as quickly as people were hoping a few months ago. Anyone sitting on a tracker or variable rate will be watching the next Monetary Policy Committee decision closely. If you are coming off a fixed rate in the next six months, do not wait for a better number before acting.

For savers it is a more nuanced picture. Rates on savings accounts have softened as markets anticipated cuts, but with inflation back above 3% the real return on cash is being squeezed again. It is worth checking whether your savings rate is actually keeping pace.
Copy

Plus
David BelleVerified
Founder and Trader at Fink Money
Like Jose Mourinho, the uk is the Special One in this scenario because of how fragile successive governments have made the economy.

The biggest identifier of this is how gilts yields trade at a premium to other G7 debt, despite these nations also having the same global shock factors.

See, the UK is an anti-productivity quagmire - industrial energy costs 80% higher than France, huge costs added to businesses via the government and no real way of understanding how to boost growth.

And now they’re likely going to hike into this supply side cost, which, since it is a supply side issue and not demand, is likely to push costs higher rather than lower, especially at the magnitude of which they are raising rates. The effect on the housing market is about to be pretty detrimental.