Inflation jumped to its highest level in eight months in the year to November, according to latest data from the Office for National Statistics (ONS).
The Consumer Price Index measure of inflation increased to 2.6% in November, up from 2.3% in October, driven higher by steeper clothing, food and fuel costs. Core inflation, which strips out more volatile goods such as energy, food, alcohol and tobacco, rose to 3.5% in the 12 months to November, up from 3.3% in October.
November’s jump in inflation was in line with economic forecasts, but as it continues to exceed the Bank of England’s 2% target, another cut in interest rates this year seems highly unlikely. Reducing rates makes the cost of borrowing cheaper, which can fuel inflation further.
Looking ahead to next year, further cuts from the Bank of England are expected, but forecasts vary as to how many cuts there’ll be, and how quickly they will happen.
What higher inflation means for your mortgage
With inflation moving further away from the Bank’s target, homeowners and those looking to remortgage may be wondering what their next move should be. Fixed mortgage rates have nudged upwards in recent months, but some lenders have now started to cut rates again as the market begins to steady.
However, rather than waiting to see whether inflation comes down next year, it’s vital to plan ahead. Many mortgage and remortgage offers are valid for between three or six months from the date they are issued, so even if your current deal still has a few months left to run, it’s a good idea start your search for your next mortgage sooner rather than later
That’s because no-one knows with any certainty exactly when we might see the next cut in interest rates, so it’s not worth missing out on competitive deals now. Securing your next mortgage well in advance means you’ll have peace of mind you’ve got a deal locked in. You can then review your mortgage again nearer the time if better rates become available.
