Stubborn inflation has clouded central bank outlook and lenders are split on pricing, but brokers say the market is entering a period of relative stability
The mortgage market is settling into a holding pattern as the IMF warns the UK risks allowing high inflation to take root, leaving the Bank of England little room to ease policy. The Fund expects the UK to post the fastest price growth in the G7 over the next two years, with inflation of 3.4% this year and 2.5% in 2026 - well above the Bank’s 2% target.
With inflation still at 3.8% in August and the base rate frozen at 4%, brokers say borrowers should not expect much change in mortgage pricing this year.
‘A bit of limbo’ for borrowers
According to Louis Mason, of Oportfolio, recent cuts from some lenders have been modest. “Rates have started to come down recently, but not by a huge amount,” he said. “With inflation proving stickier than we hoped, it feels like we’re in a bit of a limbo at the moment.”
He believes the market is heading for a quieter spell rather than another surge of volatility. “I don’t think rates will fall much further this year,” Mason added. “We’re likely to see a period of relative stability as the Bank waits for clearer signs that inflation is under control, and that’s not necessarily bad news for borrowers. A steadier market can bring a bit more confidence after a few tricky years.”
Mixed movements across lenders
That sense of stasis is reflected in the recent pattern of rate changes. Over the past few weeks, lenders have nudged some products higher while trimming others, creating what brokers describe as a patchwork market.
Daniel Crabb, pictured above, of PSG Financial Consultants, said that uncertainty over inflation and fiscal policy is keeping both lenders and borrowers cautious. “With the ongoing inflation updates, along with the unknown of the upcoming Budget, it appears any future Bank of England reductions may be unlikely,” he said.
While some lenders have edged rates up, others have taken the opportunity to sharpen their pricing. “There have been examples of improvements in certain products,” Crabb noted. “But the rest of 2025 still seems uncertain, and it’s likely to be early next year before we see any significant changes across the board.”
Patience over optimism
The IMF’s warning underscores what brokers have already sensed, that the coming months are more likely to deliver calm than relief. The Fund still expects modest UK growth of 1.3% this year but says wage pressures and persistent inflation expectations could delay meaningful rate cuts until 2026.
For advisers, that means recalibrating expectations with clients who have been hoping for rapid rate falls. Stability may not make headlines, but after two years of volatility, it might be the one trend the industry can welcome.
