Experts expect inflation to "edge up" in new data release tomorrow

The overall inflation number figure has likely edged up on the same month last year. The MPC have multiple tools at their disposal to help the economy grow without fuelling inflation and raising interest rates isn’t one of them. When the data is broken down into its various contributors, energy will be high due to the war in Iran. Non essential purchase will be lower, closing the gap between supply and demand. The war is mostly outside of peoples control in the UK so taking money out the system will be it harder for them. If the cost of running a household continues to increase, people will have to borrow less and this will cause a decline in the housing market

I would expect inflation to stay around current levels or edge higher rather than fall significantly. But for mortgage rates, the surprise matters more than the headline number. If Wednesday’s figure is broadly what markets expect, it may do relatively little; a hotter-than-expected reading is what could push swap rates and fixed mortgages higher again.

Borrowers are understandably tired of rates changing direction every few days. What the market needs now is evidence that inflation is not spreading beyond energy costs, because that would give lenders more confidence to keep reducing rates rather than reversing course again.

I'm expecting inflation to edge up slightly due to the ongoing geopolitical situation. There is already a lot built into the Swaps market so I don't expect any change to feed through to mortgage rates on the back of this figure alone. As strange as it might seem to the person in the street, an increase in base rate from the Bank of England could provide a calming effect to the markets and flatten the swap curve a touch. Borrowers main concerns are 'where is it going to end?' and concern about where their next remortgage rate will be.

I expect inflation to edge higher on Wednesday, but the mortgage market cares about the surprise, not just the headline.

If inflation comes in hotter than expected, swap rates could move higher very quickly and lenders may reprice. If it rises exactly as markets expect, much of the damage may already be priced in.

For mortgage rates to fall properly, we need convincing evidence that inflation is coming back under control, particularly wages and underlying price pressures, alongside calmer energy markets.

The question borrowers keep asking me is: “Do I fix now or wait?”

My answer is simple. Do not gamble your mortgage on one inflation print. Secure a suitable deal now and keep reviewing it. If pricing improves before completion, we can revisit it.

Hope is not a mortgage strategy.

Borrowers want a manageable monthly payment, but uncertainty makes them worry about choosing the wrong moment to commit.

I wouldn’t hang a mortgage decision on one inflation release. An unexpected rise could put upward pressure on swap rates, but a rise markets already anticipate may be reflected in pricing.

For mortgage rates to fall sustainably, markets need greater confidence that inflation is coming under control and interest rates can come down.

My message to borrowers is simple: plan around what you can afford today. Any future reduction should be a welcome bonus, rather than something your household budget depends on.