Brokers have said next Wednesday, 19 June, could be a “Big Wednesday” for borrowers as the latest inflation data is published.
Even if the Bank of England leaves rates on hold the next day, as “hot wage data makes it more likely that the inflation print won’t be what the central bank needs to slash rates before the election,” and one expert has suggested that dovish comments in the minutes could see swap rates edge down.
Elliot Culley, director at Switch Mortgage Finance said, “Inflation is one cog in a very large machine.
“If the results are as expected I can still see the Bank of England holding the interest rate at 5.25%. Wage growth is still looking strong and there are worries inflation will return in the winter.
“The Bank of England have been overly cautious since failing to react quickly enough to inflation. The worry is they will make the same mistake again.”
Andrew Montlake, managing director at Coreco said, “Next Wednesday has the potential to be a Big Wednesday for borrowers.
“If inflation edges down further, and even hits target, then the Bank of England will be under real pressure to reduce the base rate, all the more so after today’s GDP data showing the economy flatlined in April.
“Yes, there are a multiplicity of data points feeding into Threadneedle Street, and the latest wage inflation data proving sticky will almost certainly influence the MPC’s decision-making.
“But even if the decision is to hold, dovish comments in the minutes have the potential to move swaps, which fixed rate mortgages are priced on.
“There’s no doubt that next week is a big one for both borrowers and the broader property market.
Samuel Mather-Holgate, independent financial advisor at Mather and Murray Financial said, “Hot wage data makes it more likely that the inflation print won’t be what the central bank needs to slash rates before the election.
“On top of that, the Bank of England will be happy if inflation is slghtly stickier this month, as they won’t want to be seen to be doing anything political this close to an election.
“Expect a few more months of higher mortgage repayments.”
Stephen Perkins, managing dorector at Yellow Brick Mortgages said, “The Bank of England will be poring through a mixed bag of conflicting economic data points next week.
“Everyone is praying for a continued fall in inflation on Wednesday that will support the argument for a cut to the base rate, but this week’s wage inflation data may mean rates will remain higher for longer.
“That said, unemployment is rising and the economy, according to official data published Wednesday, is flatlining, so there is hope yet. A hold is still the most likely outcome but a cut cannot be ruled out.”
