Inflation held at 4% in January

The unexpected stability of the Consumer Prices Index (CPI) inflation at 4% in January brings relief to the mortgage market, which had anticipated slight increases as forecasted by experts.

Following an unexpected rise in inflation to 4% in December from 3.9% in November, the Bank of England held the base rate at 5.25% at the start of February. Amidst this decision, slight upticks in SONIA (Sterling Overnight Index Average) swap rates, a key factor in determining fixed-rate mortgage pricing, led to some incremental rate rises entering the mortgage market. However, these adjustments were relatively minor compared to the larger decreases seen in recent months.

January’s inflation data will help to ease pressures on SONIA swaps, potentially halting further rises in mortgage rates for the time being. It is likely current mortgage rates are close to the lowest level we will see for now, perhaps until the first base rate cut in 2024.

Despite a diverse stance within the Monetary Policy Committee, with preferences for both a slight increase and decrease in rates, the majority opted to keep the base rate unchanged in February. This decision gave the mortgage market a sense of assurance, indicating a steady path forward.

The recent slowdown in the UK job market, highlighted by data from KPMG and the Recruitment & Employment Confederation (REC), presented a glimmer of hope for a base rate cut later in the year, signalling some alleviation of inflationary pressures. The Bank of England’s Monetary Policy Committee has highlighted the importance of additional evidence displaying a slowdown in wage growth before entertaining any considerations for rate cuts. While January’s inflation figures support this view, the BoE is likely to wait for inflation to be closer to its 2% target before implementing any interest rate adjustments.

Increased buyer confidence

In January, increased confidence and a more favourable rate environment fuelled optimism among both buyers and sellers. According to Rightmove, the number of sales agreed was 20% higher at the start of 2024 than in the same period last year, marking the most positive early indicator of the year thus far.

Zoopla reported a 12% increase in buyer demand compared to this time last year, alongside a 22% increase in homes listed for sale, many sellers of whom are also buyers. London and the East of England are leading the rebound in new buyer demand.

We have noticed a distinct shift in mindset among individuals, with more accepting that rates are unlikely to fall dramatically overnight, and that we have potentially reached a new bottom rate for the time being. Despite slight rate fluctuations, buyers appear to be undeterred, showing a resilience born out of their patience to wait for the right moment to progress with their property plans.

Is your mortgage deal coming to an end?

Current stability and relatively lower rates present an ideal opportunity to secure a competitive mortgage rate, while still benefiting from potential rate decreases that may become available in the future before completion. With uncertainties surrounding future rate movements, many are opting to refinance now to take advantage of current market conditions.

Average mortgage rates are higher than what most people have been used to and it is likely that when your current deal expires, your rate will go up. It is important to get in touch with a mortgage consultant at least six months before your current deal ends. This is to ensure you have enough time to arrange your new mortgage and not risk closing any doors by leaving this too late. Staying with an existing lender could mean being put on a high standard variable rate. If you are struggling to remortgage in the higher rate environment, get in touch today for a personalised consultation.

Remortgaging to consolidate debt can offer an effective solution for individuals grappling with accumulated debts amid higher prices over the last few years. By consolidating high-interest debts into a single, manageable mortgage, borrowers could potentially benefit from lower interest rates and extended repayment terms. It is important to note that this may accrue more interest in total over a longer mortgage term and therefore you must assess and think carefully before securing other debts against your home.

For further details on remortgaging, please reach out to our team.

Looking forward

There is a sense of optimism as market conditions show signs of continued improvement. Enhanced buyer demand is holding house prices up, with Nationwide reporting a positive 0.7% increase month-on-month in January and only a marginal 0.2% decline since last year.

Despite projections of inflation, anticipated to briefly dip to 2% in Q2 before increasing again in Q3 and Q4, market reactions should remain moderate as long as future economic and market data align with expectations.

Recent Bank of England data revealed a rise in mortgage approvals for house purchases, from 49,300 in November to 50,500 in December, suggesting growing confidence amongst buyers and sellers amidst a flurry of rate reductions at the turn of the year.

With spring on the horizon, the property market anticipates a bustling season ahead. Lower mortgage rates have made financing more accessible for homeowners, while increased supply expands options for buyers, setting the stage for an active market ahead.

If you would like to discuss your mortgage options with a qualified professional, you can speak to one of our mortgage consultants on 0800 980 8777, or via email at

Please remember that your home may be repossessed if you do not keep up repayments on your mortgage.

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