With CPI inflation rising to 3.8% in July – up from 3.6% in June, this has raised concerns about the ongoing financial pressures on households, especially with the cost of living continuing to climb. For many, essentials like housing, food, and energy are eating into already stretched budgets, leaving little room for savings.
Below, mortgage and property experts share their reactions and insights on how this inflation data is impacting the market and what it means for borrowers and potential homeowners.
Sarah Pennells, Consumer Finance Specialist at Royal London comments:
“The rise in inflation will be concerning for those households who were only just starting to see improvements in their financial resilience, and worrying for some who continue to be squeezed by higher prices.
Our latest research shows that almost one in five adults are overdrawn at the end of the month or have no money left. Housing remains the most pressing issue on budgets, with seven in ten private renters paying average increases of over £300 a month. Essentials like energy, food and housing continue to cost significantly more than they did for most people, with households telling us they were spending an extra £148 a month on food and £129 a month on energy, on average, compared to a year earlier.
Half of UK adults still feel their savings have been weakened by the higher ongoing costs and bills, with one in five having less than £100 in savings.
Those slipping into overdraft may already be struggling with high interest rates, and rising prices only add to the pressure. For those making modest financial progress, further inflation risks undoing that hard won stability.
We’ve produced a range of information to help people save money more effectively, make a budget that works, and to cut bills and everyday expenses so their money goes further.”
Ben Thompson, Deputy CEO, Mortgage Advice Bureau comments:
“Another consecutive and frustrating rise in inflation was expected – nonetheless, this news is disappointing. While borrowing costs have continued to ease, there remains this delicate balance between controlling inflation and ensuring economic growth. It’s a complex picture, and July’s highly anticipated Oasis reunion tour will no doubt have contributed to these financial ripples.
As for future rate cuts, it’s a wait-and-see situation, albeit the view is we are near or at the top in terms of inflation. Recent news regarding employment and wage growth is likely to influence decision making, as is the continued low economic growth. Until inflation looks to be under control and visibly heading on a downward path, we won’t see interest rates fall. This, however, may not be that far away, so one more cut this year remains possible.
That being said, it’s actually a very good time to buy. The level of housing stock for sale is a lot higher than at any time in more recent years, and house prices have remained flat. With our researchrevealing that 61% of renters cited high property prices as the main barrier to homeownership, we need to debunk the idea that buying a home is out of reach.
With the right information and guidance from a mortgage broker, home moves and the dream of homeownership is achievable – along with the significant financial opportunities that come with it.
While that 5-4 verdict likely irked many investors and economists, we remain hopeful for at least one more base rate cut this year – although this is totally reliant on how inflation plays out and how much fight the UK economy has left in it. Positive movement all helps towards improving conditions in the mortgage market and enables it to be that key driver in economic growth. While inflation continues to add pressure to households – particularly when doing their weekly shop – we continue to post positive numbers when it comes to buyer registrations, valuation requests or mortgage appointments. Lender innovation and affordability tweaks have certainly helped catch the interest of potential buyers and sellers. So has the proactive approach of brokers to engage with clients early, explore all options and support borrowers in the way that only they can.”
Nathan Emerson, CEO of Propertymark, comments:
“Unfortunately, any increase seen within the rate of inflation does brings very justified concerns to consumers, many of whom are still struggling with the cost of living, which has been steadily rising over the past few years.
Although there is more work to be done to help ensure inflation tracks back down towards the Bank of England’s target of two per cent, we have seen three base rate cuts across 2025, which have provided instant benefit to those on tracker mortgages and additional new competitive rates from many lenders.
It remains important that the UK Government and devolved administrations keep a tight focus on the fact that housing plays a central role in providing consistency within the UK economy and that delivering a range of sustainable housing options brings both long-term stability and an opportunity for regional growth.”
Paresh Raja, CEO of Market Financial Solutions, said: “Today’s data highlights the tricky position facing both the Bank of England and the government. Bolstered by a reasonably strong July, the economy limped through Q2 with growth of just 0.4%. Meanwhile, inflation is running at almost double the Bank’s 2% target, leaving policymakers with a stark choice – cut the base rate further and risk entrenching inflation, or stick to a cautious approach and further strangle economic growth.
What is clear, however, is that the property market is holding firm in spite of these notable issues. House prices continue to rise, while mortgage rates have edged down towards their lowest levels in years. Taken together, this should lift buyer confidence and fuel greater market activity in the coming months.
Interest is now slowly turning to the Autumn Budget. The potential for tax hikes – and radical speculation about potentially replacing Stamp Duty with a new property tax – could start to weigh heavily on the market. So, it’s crucial that lenders and brokers continue to support borrowers as they navigate a perennially uncertain economic environment.”
Phoebus Software’s chief sales and marketing officer, Richard Pike, says: “Today’s rise in inflation adds weight to forecasts that price growth could reach 4% later this year, well above the Bank of England’s 2% target. This will, in turn, cast doubt on how quickly the Bank can move on interest rate reductions, with Governor Andrew Bailey recently warning that cuts must be made ‘gradually and carefully’. For borrowers, any delay to rate cuts means higher repayment pressures for longer, particularly for those on variable rates or coming to the end of fixed deals.
The FCA’s recent move to ease affordability requirements may stimulate activity among prospective buyers and those remortgaging, but its true impact is yet to be felt. Many borrowers on existing deals will continue to face affordability challenges, particularly as fixed-rate terms expire. In this climate, agility is essential. Lenders that have the right technology to manage risk, respond to changing market sentiment, and deliver a seamless customer experience will be best placed to support brokers and borrowers through ongoing uncertainty.”
Matt Harrison, Customer Success Director at Finova Broker said: “This news on top of the recent Bank of England base rate cut is going to leave many borrowers confused. Further rate cuts are now likely off the cards and mortgage rates hang in the balance. First-time buyers may hold off, but others will be looking to remortgage to lock in a fixed rate before lenders take matters into their own hands. Brokers have a crucial role to play here as many borrowers will be looking for advice on the best deals and when to invest.
Where outcomes aren’t clear cut, brokers need time-saving tools in place so they can focus on building customer relationships and delivering that much needed guidance. At Finova Broker, our goal is to deliver systems that can be agile in an ever-changing market – centralising enquiries, streamlining compliance, and ensuring delivery where the customer is always king.”
John Phillips, CEO of Just Mortgages and Spicerhaart, said: “Another rise in monthly inflation takes us one step closer to 4% – double the bank’s illusive target and where their long-term forecasts suggest inflation will peak. While you can say that inflation is currently playing out according to the bank’s plan, it still remains ultra sticky, highly unpredictable and totally susceptible to both internal and external economic shocks. It likely explains why the recent interest rate cut was such a knife-edge decision, and yet so necessary to give some form of support to a struggling economy.
While that 5-4 verdict likely irked many investors and economists, we remain hopeful for at least one more base rate cut this year – although this is totally reliant on how inflation plays out and how much fight the UK economy has left in it. Positive movement all helps towards improving conditions in the mortgage market and enables it to be that key driver in economic growth. While inflation continues to add pressure to households – particularly when doing their weekly shop – we continue to post positive numbers when it comes to buyer registrations, valuation requests or mortgage appointments. Lender innovation and affordability tweaks have certainly helped catch the interest of potential buyers and sellers. So has the proactive approach of brokers to engage with clients early, explore all options and support borrowers in the way that only they can.”
