The ONS has published the latest UK Consumer Prices Index data, showing inflation easing to 3.6% in the year to October 2025, down from 3.8% in September.
The decline, driven mainly by lower housing and household services costs, is the first fall in inflation for five months and arrives at a crucial moment for the mortgage market.
With the Budget just a week away, the softer inflation print will be welcome news for Chancellor Rachel Reeves as she finalises her economic plans. It also strengthens the case for the Bank of England’s MPC to move towards an interest rate cut in December, something brokers will be watching closely as it could influence fixed-rate pricing, remortgage demand and borrower affordability calculations. For now, today’s figures offer a glimmer of relief for borrowers and intermediaries alike, hinting at a potentially more supportive rate environment ahead.
Mortgage and Property experts have been sharing their reaction to these latest inflation data with us and what they mean for the mortgage market as follows:
John Phillips, CEO of Just Mortgages and Spicerhaart, said: “Today’s inflation data was pretty pivotal in proving the central bank’s point that inflation has indeed peaked. No doubt they will be relieved to see CPI drop in October, as will households up and down the country who have faced considerable pressure, whether it’s at the petrol pump, the checkout or in their energy prices. Perhaps most pleased will be the Chancellor, just one week away from Budget day.
Hopefully, this is indeed the start of an easing in inflationary pressures, and the upcoming Budget doesn’t stunt that progress. If anything, today’s news should only increase the chances of Christmas coming early in the form of a base rate cut next month – particularly after the grim news on unemployment last week. No doubt swap rates will continue to react favourably to this positive news, which will likely reflect in the activity of lenders across the market. This will be hugely welcome, particularly for those looking to get buying and moving plans back on track. As advisers, it’s up to us to keep sharing the positive headlines we are seeing in the current market and keep giving clients the confidence and support to push on with plans.”
Nathan Emerson, CEO of Propertymark, comments: “The Bank of England held interest rates at four per cent earlier this month, reflecting continued caution among policymakers while inflation remains above levels last seen in 2019.
Today’s fall in inflation will be welcome news for consumers, particularly those hoping to take their next step onto the housing ladder, as it provides a greater sense of stability and confidence.
However, inflation still needs to move sustainably below the Bank of England’s two per cent target before we are likely to see more meaningful reductions in interest rates. Continued progress will be crucial in improving long-term affordability and helping people plan their next move with greater certainty.”
Simon Webb, managing director of capital markets and finance at LiveMore, comments:
Given the shadow the Budget is casting over the sector, inflation beginning to take a downward trajectory, as forecast by the Bank of England, provides a glimmer of hope.
But whether we get another base rate cut before the end of the year now entirely rests on how the sector and the MPC reacts to Reeve’s economic roadmap next week.
For the later life lending market, now is the time for borrowers to lock in a deal, before the Budget throws a few spanners in the works. Many over-50s are making financial decisions that span decades, and while short-term movements are inevitable, the long-term need for flexible, accessible borrowing options remains clear.
This period offers a chance to strengthen conversations around building financial resilience in later life, ensuring older borrowers continue to benefit as the market evolves in a positive direction.”
Nick Hale, CEO of Movera, said:
“Inflation dropping to 3.6% is a positive indicator that regardless of what comes from next week’s budget, we could see another base rate cut from the Bank of England this year. Whether Reeves will be able generate growth while tackling rising living costs and paving the way for even more base rate cuts with this budget, only time will tell.
What’s really important is that this budget considers the effect a further slowdown in property transactions might have. Implementing a ‘mansion tax’ or increasing Stamp Duty for part of the market, while many prospective buyers are already on pause waiting for better deals, would have a devastating effect on transaction volumes going forward and the wider property sector.
However, introducing another short-term policy – like Stamp Duty relief – could also hit the sector like a thunderbolt from the blue and lead to a sharp surge in purchases.
At Movera we’re driving innovation in the property transaction process but as a sector we still have a long way to go. It’s crucial that whatever policies are implemented next week, they sit hand in hand with digital investment for the wider sector, to ensure that every element of the property transaction chain can build resilience and respond to peaks and troughs in activity with confidence.”
Richard Pike, chief sales and marketing officer at Phoebus Software comments:
“After a year of increasing prices, it looks like inflation is finally starting to slow down, which will come as a relief to under-pressure households.
It’s a much-needed pre-Budget boost for Rachel Reeves, who is looking for some rays of light on the economy amid the recent gloom. We’re all eagerly awaiting to see what she can pull out of the hat in next week’s budget to bring the economy back on track, with the Government’s position changing almost daily.
The drop in inflation, along with a cooling labour market and the prospect of fiscal tightening in the budget, strengthens the case for the Bank of England to deliver an early Christmas present for borrowers and cut the base rate in December.
This would help alleviate affordability pressures, unlock greater borrowing potential and support increased mortgage activity – providing a much-needed boost for the market.”
Alex Upton, Managing Director, Specialist Mortgages & Bridging Finance at Hampshire Trust Bank said:
“While rents continue to rise, the rate of growth has been slowing for some time. Even so, the conditions for further increases remain. Propertymark’s latest data shows demand from tenants is still significantly outpacing supply, and that level of competition is likely to keep rents under pressure. It will be important to see how that dynamic evolves now that the Renters’ Rights Act is on the statute book.
The Renter’ Rights Act is already prompting landlords to reassess their position. Some are choosing to exit the market, while others are adapting by restructuring portfolios, exploring incorporation, or planning upgrades to meet future requirements. This shift is driving greater demand for longer-term thinking and practical guidance.
All eyes are now on next week’s Budget. Speculation around further tax changes, including the potential introduction of National Insurance on rental income, is adding to uncertainty. This would have a particular impact on landlords holding property in their own name rather than through a company structure.
The Chancellor must strike the right balance. Raising standards across the rental sector is important, but that cannot come at the expense of long-term capacity. Without a meaningful increase in housebuilding, home ownership will remain out of reach for many, and the rental sector will need to carry more of the weight.”
Ben Thompson, Deputy CEO, Mortgage Advice Bureau:
“The news that inflation has fallen to 3.6% provides the housing market with a much-needed shot of confidence, boosting hopes for a final base rate cut of the year in December.
This cooling of price pressures is the clear evidence the Bank of England needed. It removes the pressure for further rate hikes and shifts the conversation firmly towards when, not if, they can begin to cut the main interest rate.
With the Autumn Budget just around the corner, there is now more room for manoeuvre. The Government must still, however, ensure spending decisions do not risk reversing this positive trend, and that is a finely balanced objective.
Amidst this relief, it’s vital to focus on the bigger picture. The housing market has reset compared to three years ago: property prices are cheaper, borrowing power has vastly improved, and affordability is quietly recovering.
Our data confirms this opportunity: the average deposit required to buy a home has decreased by 4.04% (down to £57,389) year-to-date, while average borrowing power is up 3.37% (£199,328). Essentially, if you need to move, now is not the time to delay your homebuying plans, especially as there is a lot of stock for sale in many parts of the UK right now.”
We get that the mortgage market is complicated. That’s why a broker is your essential guide, cutting through the confusing jargon and economic turmoil to lock in the right deal for you, and at the right time.”
Peter Stimson, Director of Mortgages at the lender MPowered, comments:
“Next week’s Budget is now the only barrier to a December base rate cut.
The Bank of England’s prediction that inflation would peak in September has proved spot on, and October’s fall in CPI was bang on expectations.
At 3.6%, CPI is still well above the Bank’s 2% target, but the direction of travel matters more. With wage growth cooling, the inflationary pressure is easing and headline inflation should gradually tick down further.
This gives the Bank’s Monetary Policy Committee a free hand to cut its base rate to below 4% when it meets next month. With the UK’s economic growth slowing and nearly half of the committee voting for a rate cut in November, a December cut now looks a racing certainty – provided the Budget doesn’t throw a spanner in the works.
Mortgage lenders have already responded to the changing outlook. Swap rates – which track future base rate expectations – ticked down at the end of October and this prompted a burst of competition on fixed rate mortgages as lenders trimmed their rates in an effort to grab a bigger slice of a market becalmed by pre-Budget uncertainty.
Swap rates have started to creep back up in recent days, so lenders are now likely to pause their rate-cutting until after the Budget. Assuming the Budget doesn’t derail everything, the market is still expecting two or possibly three further base rate cuts by the middle of next year. But that is far from certain, and we are already approaching the bottom of the interest rate cycle.
If you have a mortgage with a fixed rate that’s due to expire in the first half of 2026, it’s worth shopping around and talking to a broker now. You can reserve a new rate several months before the end of your current deal, and doing so will ensure you don’t lose out if rates start creeping back up in the New Year.”
Chris Storey, Chief Commercial Officer at Atom bank, comments:
“While the ONS has reported a slowing in the rate of house price growth, they have still hit another record high. Despite this, there are deals to be had – analysis from Propertymark shows that 93% of sales at the moment are at below asking price, the highest ratio in years. While prices are rising, vendors are willing to negotiate, and the falls in mortgage rates mean buyers feel more comfortable pursuing a transaction.
Next week’s Budget has to be seen as a great opportunity to boost the position of hopeful buyers. Despite promises of greatly improved rates of housebuilding, production is going backwards, and until that challenge is tackled we are likely to see house prices grow further. While measures that support high-LTV buyers would be welcome, the Chancellor must ensure they don’t simply push prices to unaffordable levels.
For mortgage lenders, there is a duty to ensure certain subsections of aspiring borrowers are not excluded. Our recent Near Prime Index showed brokers are frustrated by the black and white attitudes of lenders towards borrowers with credit blips, for example. It’s our responsibility to ensure applicants are judged fairly, based on their individual circumstances, rather than relying on unsophisticated, box-ticking methods which can discriminate.”
