Last April, the UK saw an increase of 1.1% in average house prices over the same month the previous year, says the Office for National Statistics (ONS). This positive trend marks the first month of annual price growth after eight months of decline.
Despite this development, experts anticipate that the Bank of England will likely postpone any interest rate cuts – which could potentially lower mortgage rates – until after the General Election on July 4th.
It is expected that the Bank will reach an agreement on interest rates by Thursday. But, No immediate changes are anticipated. This comes even as inflation has dropped back to the Bank's target rate of 2% in May from 2.3% in April.
Although the decrease in inflation is encouraging, borrowers looking for a reduction in interest rates may need to exercise patience.
Annual House Prices Increase in the UK
- House Prices: According to ONS data, house prices increased by 0.6% in England 0.4% in Wales and by 4.5% in Scotland over the year ending in April. Northern Ireland also saw a 4.0% rise in property values, during the quarter of this year.
- Rents: In the year, up to May the average private rents in the UK went up by 8.7% showing a decrease from the 8.9% rise observed in April. This rate is still lower, than the peak increase of 9.2% recorded in March.
- Mortgage Rates: Market experts consider the fall in inflation to be positive, at least in the short term, but this is unlikely to lead to a significant fall in mortgage rates.
Matt Smith, who works as a mortgage expert for property website Rightmove, is rather optimistic. He stated: "I hope that today's fall in inflation is the first step towards lower mortgage rates in the second half of the year": "I hope that today's fall in inflation is the first step towards lower mortgage rates in the second half of the year".
Many members of the sector share this sentiment. David Hollingworth of L&C Mortgages concurs. "The fall in inflation to the Bank of England's target rate of 2% is good news". “This moves a step closer to the point when the Bank of England could feel confident enough that inflation is coming under control, opening the door to a cut to the base rate," He declares.
Lower inflation is often a precursor to lower interest rates, which is good news for anyone with a mortgage or looking to get one.