Inflation rise ‘grim’ information for these trying to get on property ladder or renew mortgage

Inflation rates have gone up again pushing them further from the Bank of England’s 2% target – here’s what it means for homeowners and those looking to get a mortgage

Inflation rates have risen again spelling grim news for those that are looking to get on the property ladder next year or renew their mortgage.

They’ve gone up from 2.3% in October to 2.6% in Nobember – pushing it further away from the Bank of England’s 2% target. Jonathan Bone, Head of Mortgages at online mortgage brokers, Better.co.uk explained what this could mean for future home buyers as we look towards 2025.

He said: “Today’s percentage increase in inflation isn’t anything ground-breaking. It was always likely that inflation would be pushed upwards towards the end of 2024 after it took a dip during the warmer months.

“Fuel and clothing were among the main drivers behind the rise, but things like ticket prices for gigs and plays were also factors that played into this too.

“However, what is yet to be determined is how the new budget announcement at the end of October is going to impact inflation as we move into 2025.

“If it stays at the level it is currently (above the 2% target), it’s likely that we’ll see the Bank of England be even more cautious about dropping base rates in the first half of 2025.

“For now though, the rise in inflation announced today will mean more than likely that we’ll see the Bank of England hold their base rates at 4.75% during the announcement tomorrow, and if it isn’t, it will come as a huge surprise for a lot of economists.”

He added: “For those trying to get on the property ladder or renew their mortgage as we come towards the end of the year, the Bank of England keeping their rate as it is will mean that a lot of lenders will respond by not being able to drop their rates any further.

“Not only can this give prospective home buyers or those looking to renew less choice on what kind of mortgage they go for because of affordability, it can also increase monthly outgoings and leave less room in people’s budgets for savings or meeting mortgage payments every month.

“As well as that, rising inflation costs can also impact housing supply and demand, as it can cause materials, labour, and construction costs to rise, which can slow down new housing developments being built. This means that there becomes a bigger demand for homes, which can ultimately push prices for homes up, making it increasingly difficult for first-time buyers to get on the property ladder as saving for a down payment or being accepted for a mortgage becomes more difficult.

“With this in mind, it is now more important than ever that prospective buyers or owners who have their mortgage up for renewal in the next few months speak to a mortgage advisor or lender as soon as possible so that they can take advantage of the best rates today without relying on or hoping for future mortgage rate reductions in the new year.”

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