Mortgage rate cuts coming but don't hold your breath

When news dropped yesterday that the rate of inflation fell last month, it came as a surprise.

- HOWARD MUSTOE

Most economists thought that price rises would stay at 2.6 per cent for the year in December, the same figure that was recorded in November.

Instead, it came in at 2.5 per cent, helped out by a dip in hotel prices and a slower pace of price increases at restaurants, according to the Office for National Statistics (ONS), making that the final figure for 2024.

Milder inflation has brought hope that the Bank of England may lower interest rates, saving borrowers considerable sums on loans and mortgages. The central bank’s rate-setting committee will make a decision in three weeks’ time.

Danni Hewson, AJ Bell head of financial analysis, said that the chances of a rate cut at the next meeting have risen from 60 per cent to over 80 per cent, citing information from data firm Refinitiv.