The news comes on the same day two main high street lenders – HSBC and Halifax – have made more mortgage price cuts, offering further positivity for borrowers.
Inflation, as measured by the Consumer Price Index (CPI), was 6.7% in September, meaning the price of goods and services had increased by 6.7%.
Data out today revealed it has risen by 4.6% in October and is therefore edging closer to the Bank of England’s (BoE) 2% target.
The BoE has been raising interest rates in order to bring down inflation. Therefore, the fact the figure has reduced so sharply means there is less chance of a Base Rate hike when the bank’s decision makers meet again in December.
But, for anyone hoping that today’s data may spark a cut to the Base Rate, most experts think this is unlikely.
Alice Haine, personal finance analyst at Bestinvest, said: “Falling inflation delivers fresh hope to mortgage holders and prospective buyers, who will be praying for interest rate cuts to soften the blow from high mortgage rates.
“However, for now, a headline rate of 5.25% is likely to remain the status quo as the BoE endeavours to ensure inflation continues to ease in the coming months.”
How today’s inflation data will influence your remortgage
A hold on interest rates means anyone on a tracker or variable rate mortgage won’t see any increases or falls to their rate. However, the fixed-rate mortgage market is a different matter.
Although interest rates have been held at 5.25%, fixed rate mortgages have been decreasing in price recently.
Halifax and HSBC are today both releasing new cut price deals which include two-year mortgages with rates below 5%.
Only last week Nationwide introduced a two-year fix at below 5% too.
When big names such as these begin making cuts, it is likely others will follow, meaning competitive pricing will ensue.
David Hollingworth, associate director at L&C Mortgages said, the fact today’s inflation data was better than expected will help to underpin these improvements to the rate outlook.
“Two year fixed rates have edged below 5% in the last couple of weeks,” he said, “with major players like Halifax and HSBC joining the leading pack today. Five year rates are nudging closer to 4.50% and could dip below that mark in coming weeks.”
He added: “I’d expect to see more lenders following the more sharply priced competition and improvements look set to continue.
“That will be welcome news to borrowers that were facing substantially higher rates only a few months ago, although those coming to the end of an ultra low fixed rate will still be seeing a sharp rise in payments.
“Shopping around and taking advice will remain the name of the game in a shifting market.”
What will happen to mortgage rates in 2024?
What’s the outlook for 2024? Emma Jones, managing director at Whenthebanksaysno.co.uk said the fall in inflation created the potential for a more stable mortgage and property market as we entered 2024.
“Bad times don’t last forever and that’s been proved with the news today. With lenders now competing ferociously for business and cutting mortgage rates across the board, it’s hopefully a sign of positive things to come.
“There may, just may, be some light at the end of the tunnel for UK households.”
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