Mortgages.scot

Just a day before the Autumn budget which is unlikely to be good news for many, updates to inflation was released and the market continues to see mortgage rates, fixed in particular continuing to fall.

Inflation

The Consumer Price Index (CPI), the most used index to track inflation has increased to 11.1%. Increases in energy and rising food prices continue to be the main drivers. It has been over 40 years since inflation was this high. A significant jump since last month when it was 10.1%.

The Consumer Price Index which also tracks housing costs (CPIH) also increased. Rising from 8.8% last month to 9.6% in October.

It is unlikely to start going down until next year, but, I would anticipate it going higher still before coming back down.

Mortgage Rates

Some slightly better news is that some mortgage rates continue to reduce. 2-year fixed rates which had peaked at around 6.6% have dropped to 6.2%. Not much but less is certainly better.

The biggest movement is with 5-year fixed, they were peaking at 6.5% but there are some rates in the market at 5%.

The reason? Gilt yields, they dictate the cost of government borrowing. Currently, they have fallen back to the level seen prior to the disastrous mini budget from Liz Truss. Gilt yields impact mortgage rates.

Overall the projections suggest, but as always should be treated with caution, that rates will continue to fall into 2023 with an anticipated peak in the Bank of England base rate at 4.5%. That is much lower than originally anticipated immediately after the mini budget in September when it was excepted to peak at around 6%.