Inflation blip will see mortgage rate cuts ‘later than expected’
Economist Ruth Gregory says mid-summer may be the earliest agents will see a reduction in the Bank of England's base rate.
A surprise increase in inflation has forced experts to revise their predictions of an early interest rate cut.
Inflation rose to 4% from 3.9%, and analysts are now saying June may be the earliest for a reduction in the current Bank of England base rate of 5.25%.
Rates slashed
But lenders are still slashing mortgage rates with Coventry, Santander and Skipton the latest to reveal cheaper loans.
Earlier this week, Metro Bank, NatWest and HSBC, all reduced their rates, as did specialist buy-to-let finance firm MT Finance.
And the Bank is still expected to cut its rate to around 4.25% by the end of the year.
Ruth Gregory (main pic), Deputy Chief UK Economist at Capital Economics, says she believes inflation will fall below the Bank’s 2% target in April, which would lead to a cut in interest rates by June.
Imperative
Nathan Emerson, CEO at Propertymark, says: “It’s imperative to remain mindful the coming months will feel like a transition period as we find a healthier balance again.
“Last year the Governor of the Bank of England hinted there would be no quick drops in interest rates in order to keep check on inflation.
We are starting to see the house prices in many areas springing back to growth again.”
He says buyers and sellers will have to carefully search out the best options for their personal circumstances.
“There is positive news within the property market however, we are starting to see the house prices in many areas springing back to growth again, and Propertymark are optimistic this will become a more widespread picture as we head further into 2024.”
