Today, the Office for National Statistics (ONS) announced that Consumer Price Inflation (CPI) rose by 1.7% in September 2024, down from 2.2% in August, and approximately 0.2% below some analysts’ expectations. CPI inflation is now below the government’s 2% target in September.

According to the ONS, price pressures continue to ease, with today’s data driven by reductions in airfares and petrol prices. However, households face a rise in food and non-alcoholic drinks. Services inflation fell from 5.6% to 4.9%, which has been a main area of concern for the Bank of England.

While this data is encouraging, energy prices and global events continue to present significant risks to inflation, which could complicate the outlook in the months ahead.

Easing pressures on mortgage rates

The positive inflation report may relieve pressures on SONIA (Sterling Overnight Index Average) swap rates, which have been on the rise lately. Some lenders had begun increasing mortgage rates in response, though rates had been decreasing for months, narrowing profit margins against the cost of funds.

The uptick in SONIA swap rates had brought some mortgage rates back to levels seen a few weeks ago, resulting in slight adjustments that have only marginally increased monthly mortgage payments compared to the most competitive recent rates.

However, developments in the latest inflation data may reverse some rate increases, depending on how SONIA swap rates respond to these changes. Though lenders are likely to monitor market changes closely, especially in the lead-up to the autumn budget, adopting a cautious approach.

Chances of November interest rate cut jump

Today’s inflation news offers the Bank of England additional incentive to consider another base rate cut in its upcoming November Monetary Policy Meeting, potentially marking a second reduction in 2024. However, the autumn budget and global economic events still introduce considerable uncertainty that could influence mortgage rate trends.

For borrowers in need of a mortgage, this is a time to reassess your options. While today’s news is a positive shift, it also signals further changes in the mortgage market, making it essential to evaluate your options carefully.

Those that are buying should reconsider their purchasing position and consider how their monthly repayments may look. If you plan to remortgage or product switch with an existing lender in around the next 6 months, it could be beneficial to explore your options now and lock in a rate. Similarly, if you have an offer accepted on a property, it may be wise to secure a rate soon for added certainty, with the flexibility to adjust later on if necessary.

For personalised mortgage advice, please reach out to our team on 0800 980 8777 or email info@privatefinance.co.uk. You can also book a time with one of our mortgage experts here.

Your home may be repossessed if you do not keep up repayments on your mortgage. Private Finance is not a tax advisor and this article does not constitute tax advice.

We strongly recommend that you seek tax advice from a relevant professional where required. Should you wish to be introduced to a specialist in this area, please let us know.

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