The Office of National Statistics (ONS) recently announced that UK inflation had fallen from 3.2% in March to 2.3% in April 2024. This is a welcome sign that the UK economy continues to recover following a difficult period.
However, it should be noted that current inflation remains higher than the Bank of England’s (BoE) target of 2%. It is also true that inflation has fallen more slowly than the BoE anticipated, with forecasts predicting inflation to reach 2.1% for April. Services inflation has proven to be particularly stubborn, falling from 5.9% for April, down from 6% in March according to the ONS.
With these nuanced factors in mind, the question is how will the property market react to this latest news?
The mixed news surrounding the latest inflation announcement may leave borrowers wondering what this could mean for mortgages. Although it is not possible to fully predict how the BoE will respond to inflation figures in the future, the good news is that lenders appear to be responding positively to the continued recovery of the UK economy.
Forbes recently reported that major lenders Halifax and Santander have cut fixed rates following the latest fall in inflation.
Santander for Intermediaries is set to cut selected rates available through brokers for buy-to-let and residential by as much as 0.27%, while Halifax has announced that it will cut two and five-year fixed rates for homeowners by up to 0.19%.
This will be particularly welcome news to first-time buyers, who accounted for 38% of mortgage applications during Q1 2024 according to data from Legal & General Mortgage Services. Their findings also suggest that mortgage affordability is increasing, with loan values searched by brokers between Q4 2023 and Q1 2024 increasing by 3.7%.
Overall it appears that while the reaction to the latest economic news is mixed, the current mood of the property market is cautiously optimistic for both borrowers and lenders. With more mortgage products coming to market than in previous years and lenders responding positively to falls in inflation, buyers have a strong incentive to pursue their property goals.
Whether you are looking to buy your first home or have an existing mortgage deal that is due to end soon, talking to a mortgage broker can help to make sure you get the best deal. We’ve been pairing clients with their perfect mortgage for over 40 years, comparing the latest rates of 50+ lenders to find the right one for you.
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