Mortgage Market News

UK’s Economic Pivot: Falling Inflation & The Impending Interest Rate Decision

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Wednesday July 19, 2023

Inflation and core inflation rates in the UK have started to retract, painting a more optimistic picture for the UK economy. It’s the silver lining that we’ve been cautiously awaiting. While we’re far from the government’s 2% inflation target, there are signs that the situation is beginning to stabilise.

Core inflation – the often-overlooked figure that discounts volatile elements such as food and energy costs – is the figure that really catches the eye of money markets and central banks. While the UK’s core inflation peaked at an alarming 7.1% in May 2023, its highest since March 1992, recent adjustments might just be the turning point we’ve been hoping for.

The recent trends could potentially see a domino effect on swap rates. Already, there’s been a noticeable dip, down to 5.458% as of 19.07.2023 from 5.733% a mere 48 hours ago. This could signify that money markets are slowly but surely regaining confidence in the UK’s economic stability.

The real question on everyone’s lips? How will the Bank of England respond at the next rate-setting meeting on 3rd August? Will they maintain a conservative stance, holding the rate at 5%? Or, buoyed by the positive shifts, will we see an adjustment down to 4.75%? Predictions are tricky, but optimism is on the rise.

Now, for mortgage borrowers: the recent spike in swap rates meant lenders were taking a hit, with higher fixed-rate mortgages as a result. As these rates potentially stabilise, or even reduce, the mortgage landscape might start to look more favourable.

For those currently bound to fixed-rate mortgages that are soon expiring, relief might be on the horizon. Our team at stands ready to guide you through these evolving circumstances and uncover innovative solutions.

And if you’re considering a shift away from the pricey fixed-rates, now might be the moment to weigh the benefits of variable rates and tracker mortgages linked to the Bank of England base rate. Particularly, those eyeing a loan-to-value of 60% or lower might find these options more cost-effective.  We can help you achieve this if you have assets such as ISAs, investments, pensions, or even cryptocurrency.

Ready for a deeper dive? Reach out to us today on 020 7519 4900. We’re here, steering through the twists and turns of the mortgage market alongside you.

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