The Consumer Price Index (CPI) rate of inflation for June 2023 has dropped from 8.7 percent to 7.9 percent.
Prior to today, experts and economists had predicted that CPI inflation would fall to 8.2 percent, with attention focussing on the core rate – the change in the costs of goods and services.
In a bid to mitigate the impact of inflation, the Bank of England has raised the base rate 13 consecutive times in the past year.
As inflation decreases, experts predict the base rate to jump up to 5.5 percent in the Bank’s next monetary committee meeting.
While mortgage rates are not pegged directly to the base rate, it is warned that another big hike cannot be good news for mortgage borrowers – or renters.
As it stands, the base rate is at five percent, but experts predict it will reach six percent by the end of the year.
High inflation and interest rates have had devastating impacts on consumer prices, with millions strapped for cash as they rearrange their finances.
Millions of Britons have had to grapple with rising mortgage rates and food prices as the Bank attempts to achieve its two percent inflation rate by December.
Clare Batchelor, Mortgage Operations Manager at Wesleyan, said: “Inflation’s moving in the right direction. The central bank has been clear that it must ‘see the job through’ when it comes to bringing inflation down to its two percent target, so it’s widely expected that it will raise interest rates again in a few weeks’ time. Potentially, we’ll see even more rate rises beyond that later this year if prices are still rising too quickly.
“This will ring alarm bells for those seeking a mortgage or who are about to slip onto a variable deal. Mortgage rates have recently raced to 15-year highs, heaping hundreds of pounds on household budgets that will already be painfully tight. For those who will be hit by a higher rate in the coming months, it’s recommended to speak to a mortgage adviser now – it can take time to find and secure a deal, and any delay may be costly.”
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