Mortgage rates to remain high as inflation rises – warning

Housing costs pushed inflation back above the Bank of England’s target in October impacting mortgage rates, official data shows.

Office for National Statistics figures show the consumer prices index (CPI) rose by 2.3% in the 12 months to October 2024, up from 1.7% in September.

The largest upward contribution to the change in CPI came from housing and household services, mainly because of electricity and gas prices.

The largest offsetting downward contribution came from recreation and culture.

Sarah Coles, head of personal finance for Hargreaves Lansdown said this “unwelcome return above the inflation target” is unlikely to be a one-off and is bad news for mortgage borrowers.

Coles said:

“Given that the Bank of England doesn’t expect stubborn inflation to hit the target any time soon, we’re likely to see higher rates continue to be priced into mortgages for the rest of 2024.”

Nathan Emerson, chief executive at Propertymark, said:

“It is disappointing to see that inflation has increased considering the overall trend throughout the year. 

“However, there are many national and global factors that impact the UK economy, hopefully inflation will better stabilise, and the UK economy should continue to adapt, no matter what happens in response to national and international events. 

“With housing playing a vital role in the growth of the economy, over time it would be positive to see interest rates drop to levels not seen since 2019, in order that more people can afford to enter the housing market for the first time, or make their next all-important home move.” 

Kindly shared by Estate Agent Today