Editor's note: This brief was summarised by The Property AI Newsroom from a report by PropertyWire. Read the original article for full details.
UK Inflation Drops to 2.8% as Lenders Cut Mortgage Rates
UK inflation fell to 2.8% in April, down from 3.3% in March, according to the Office for National Statistics. This larger-than-expected decline has led several major lenders, including Halifax, HSBC, and Santander, to reduce selected fixed mortgage rates in recent weeks.
The drop in inflation was mainly attributed to lower gas and electricity bills following the April reduction in the Ofgem energy price cap. Food inflation also eased, and package holiday prices fell compared to a year earlier. Core inflation, which excludes food and energy, dropped to 2.5%.
Labour market data released this week showed the UK lost approximately 100,000 payroll jobs in April, and regular pay growth slowed. These economic indicators have influenced lenders' pricing strategies, with adjustments reflecting expectations for future borrowing costs.
Economists caution that the fall in inflation may be temporary, as oil and petrol prices have risen sharply and the energy price cap is expected to increase again in July. Some analysts predict inflation could rise towards 4% later this year.
The Bank of England’s next base rate decision is due in the coming weeks, with opinion divided on the outcome. The central bank continues to target a 2% inflation rate, but ongoing geopolitical tensions and energy market volatility are affecting the outlook for monetary policy and the property market.
For letting agents and inventory clerks, these developments may influence tenant affordability and landlord decisions, as mortgage rate changes and inflation trends impact the wider UK property market.
Source: PropertyWire