
Mark Harris
Chief Executive
News that the rate of consumer prices index (CPI) inflation fell to 2.5 per cent in December, a surprise dip from November’s 2.6 per cent, bodes well for the future direction of interest rates.
Although the Bank of England’s inflation target is 2 per cent, it is encouraging that it is moving in the right direction and with it being weaker than previously thought, it raises the chances of a February interest rate cut to 4.5 per cent. With GDP growing by just 0.1 per cent in November, following two months of contraction, a rate cut would also help counter the slowdown in the economy.
Swap rates, which underpin the pricing of fixed-rate mortgages, have softened on the back of the inflation and GDP data but regardless, a number of lenders have raised rates in the past few days.
Anyone looking to take out a new deal this year should seek advice from a whole-of-market broker such as SPF. With lenders repricing at short notice, it is worth planning ahead as much as possible – rates can be booked several months before you need them so it might be worth reserving a deal now; if pricing is lower by the time you take out the mortgage, you should be able to move onto a cheaper product.