The latest inflation data will “signal” to the Bank of England to hold interest rates at their current level and “kickstart the property market”, according to one broker.
The Mortgage Stop director, Rohit Kohli, argued that the fall in inflation to 6.7 per cent, as announced by the Office for National Statistics this morning, should mean the BoE looks to leave interest rates as they are.
R3 Mortgages director, Riz Malik, shared a similar sentiment: “This data, especially the drop in core inflation, is very positive news ahead of the base rate decision on Thursday.
“In fact, rather than waiting until the end of the year, we could see a ‘hold’ decision sooner than we think, potentially tomorrow.”
Mather and Murray Financial independent financial adviser, Samuel Mather-Holgate, stated that the ONS’s data is “great news for anyone with a mortgage”.
He explained that inflation was expected to increase this month, but instead both headline and core rates had reversed.
Therefore, this gives the Bank of England a reason to "keep rates on hold as opposed to hike them again".
He added that, as a result more mortgage rate cuts are now likely.
Whenthebanksaysno.co.uk managing director, Emma Jones, added: “Following this data, hope is growing that mortgage rates may now have peaked, despite a potential 0.25 percentage point increase in the base rate tomorrow.
However, she cautioned: “Nothing is guaranteed so if you are thinking of securing a deal now it may not be around for long.”
Lodestone Mortgages & Protection director, Craig Fish, said that the expected increase in base is now “no longer a given”.
He added that, following recent commentary, “we may now even find ourselves at the peak”.
Additionally, Coreco managing director, Andrew Montlake, stated that, while the inflation battle “is not won yet”, the ONS’s figures are a “substantial advance”.
As a result, Montlake argued the Bank of England should pause from any further action to see if this trend continues rather than go too far.
Montlake also stated that he expects to see Swap rates continue to ease over the coming days which will give lenders “more ammunition to escalate the rate war” that has been brewing recently.
“We have already seen the first fixed rates under 5 per cent and we are now likely to see more choice at this level,” he explained.
Investing Reviews equity research analyst John Choong stated that the inflation data “invokes the possibility that the Bank of England’s rate-hiking streak could end as soon as tomorrow.”
However, Choong acknowledged that “there’s still a long way to go” before inflation returns to the Bank of England’s 2 per cent target.
Thanks to the Newspage community for sharing their thoughts with FTAdviser.
tom.dunstan@ft.com
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