UK inflation rate expected to stay at around 2%

The UK inflation rate should remain at around 2% when the figures for June are released this week, raising the possibility of further rate cuts in the months ahead.

As it stands there’s a 50% chance of the base rate coming down in August, and if not it’s expected in September.

Inflation reached the Bank of England’s long-term target of 2% in May.

Sarah Coles, head of personal finance, Hargreaves Lansdown, said:

“This will be welcome news to anyone who remortgaged onto a variable rate early this year – when rate cuts were expected to be just round the corner – who will have been on tenterhooks ever since.

“However, movement isn’t likely to be quick, with no more than a couple of cuts in 2024.

“There’s also the chance of a longer pause if wages are pushed up by changes to the minimum wage or if economic growth surprises on the upside.

“You’d be forgiven for thinking that bearing all this in mind, the fixed-rate mortgage market might be unmoved.

“However, we’ve seen some cuts in the past week or so, with a number of the biggest lenders cutting rates, and the average inching downwards.

“Part of this is a price war during a busy time for the markets ahead of the school holidays.

“Part of it is the fact that the first forecast rate cut is inching closer, and lenders are factoring in lower rates throughout the fixed period.”

For people who have a remortgage looming Coles recommended agreeing a rate now. That way, if rates go down people might be able to find a better offer, but if they rise, they can lock into a better deal.

Kindly shared by Property Wire