Inflation will be 'uncomfortable reality check' for home buyers
Today's inflation figure will be an "uncomfortable reality check" for home buyers, an expert has warned.
Peter Stimson, director of mortgages at the lender MPowered said rates could start to increase in the coming weeks as swap rates, which influence what lenders charge borrowers, rise.
"For anyone planning to buy their first home or remortgage this summer, who'd been assuming that the only way is down from mortgage interest rates, today's data will be an uncomfortable reality check," he said.
"Mortgage rates may well have fallen as far as they can for now, and in the coming weeks, rates may even creep up back as lenders recalibrate in response to rising swap rates."
High inflation, grouped with rising oil prices and global economic uncertainty, means the chances of the Bank of England reducing its interest rate tomorrow are virtually non-existent.
"The swaps market... is already implying that there will be just one further cut to the base rate this year," Stimson added.
"Until last week, it wasn't unreasonable to expect that this cut might come in August. But with inflation proving increasingly stubborn, the probability of this happening has slipped to no more than 50/50."
'Focus on getting best available rates'
His thoughts were echoed by David Hollingworth, associate director at the UK's largest mortgage broker L&C Mortgages, who said borrowers should be focusing on getting the best available rate.
"Mortgage rates have been harder to call in recent weeks. After a period of fixed rate increases, there's now a more mixed move in rates with some lenders cutting deals again slightly, as markets find their level," he said.
"Overall, it looks as though fixed rates may bobble up and down without any significant trend or shift either way. Borrowers would be better to focus on getting the best available rates and keeping under review, rather than second-guessing the next move in interest rates."