Some much needed good news for mortgage and property markets this morning, that UK Inflation has dropped to 2.6% for the year to March, sparking cautious optimism across the mortgage industry. While some see it as a signal of relief, others warn the road to stability is still littered with economic hurdles.
Mortgage market experts react to surprise inflation drop
The UK mortgage industry is greeting today’s unexpected dip in inflation with a mix of optimism and guarded realism, as the Consumer Prices Index (CPI) fell to 2.6% in March – down from 2.8% and marking the second consecutive monthly drop.
The Office for National Statistics’ figures have stirred conversations across the property finance sector, with many brokers and lenders hopeful the reading may tilt the Bank of England towards an interest rate cut in the coming months.
Commenting on these data, Frances Haque, Chief Economist at Santander UK, said: “This morning’s data on inflation will be warmly greeted by many homeowners given the likely impact on SWAP and Bank Rate, but for some, it will continue to be overshadowed by the uncertainty around global tariffs and implications for the UK economy.
“CPI grew by 2.6% in March, down from 2.8% in February – below consensus, and more importantly, the Bank of England’s forecast. Although markets are already expecting a further cut to Bank Rate in May, this will help provide support for that. As we move forward, inflation will inevitably rise again given the increases in household bills that April brought, however, the impact of US tariffs on inflation is proving a little trickier to predict with the potential for effects to swing both ways.
“April’s stamp duty deadline sparked a new lease of life into the housing market, with our data showing a 200% increase in completions in March year-on-year. We continue to forecast a base rate cut at the next meeting and two further rate cuts during the remainder of the year – enabling the Bank of England to strike a balance between supporting growth in a time of economic uncertainty and containing inflation.”
John Phillips, CEO of Just Mortgages and Spicerhaart, welcomed the fall but flagged the bigger picture: “While positive and better than many expected, it’s still hard not to see today’s news as a bit of a hollow victory. New tax changes and price hikes are incoming, and let’s not forget the threat of a tariff war looming in the background. But the positive read on inflation will influence the MPC’s thinking on rates – and swap rates have already reacted.”
Phillips also pointed out that despite ongoing uncertainty, activity remains strong: “Buyer registrations, valuation requests, and appointments are holding up well. The best brokers are staying close to their clients and continuing to deliver value, regardless of what the market throws at them.”
Daniel Austin, CEO and co-founder of ASK Partners, echoed the sentiment that the inflation dip offers hope – but not without caveats. “This is a welcome signal after last month’s interest rate hold, but the volatility driven by international politics, particularly Trump’s tariff threats, keeps everyone on edge. Mortgage rates may take time to reflect the changes, and high fixed rates still present challenges.”
He added that lower inflation could restore momentum to a housing market still recovering from the end of the stamp duty holiday. “A stable rate environment could revive buyer confidence. For investors, the prospect of cuts supports activity in resilient sectors like co-living and build-to-rent – but agility and planning remain essential.”
Simon Webb, managing director at LiveMore, highlighted the potential impact for later life lending. “A falling inflation rate is good news for confidence in the property market. Affordability challenges remain, but as the market starts to price in rate cuts, opportunities open up for older borrowers. Tools like our Mortgage Matcher are already helping advisers serve this growing segment.”
Richard Pike, chief sales and marketing officer at Phoebus, noted the broader economic implications. “This surprise fall challenges expectations, given the upward pressures from labour and global trade costs. It strengthens the case for an earlier base rate cut, which could ease affordability constraints and fuel springtime market momentum.”
Nick Hale, CEO of Movera, sees today’s numbers as a cautious step forward. “After a tough winter and early 2025 economic contraction, any sign of relief is positive. It may not move the BoE’s dial just yet, but it reinforces the case for a cut soon. We remain focused on helping people move with confidence, whatever the macro backdrop.”
Ben Thompson, Deputy CEO at Mortgage Advice Bureau, summed up the mood of measured optimism. “This might be the last good reading for a while, so let’s enjoy it. Inflation is still proving difficult to tame – like trying to put toothpaste back in the tube. And with unpredictable developments in the US, trying to forecast UK outcomes is like walking through fog blindfolded.”
For Thompson, the value of brokers in this environment is crystal clear: “Whether buying or remortgaging, clients need expert guidance to cut through the noise. Brokers are vital to navigating what’s next.”
Finally, Nathan Emerson, CEO of Propertymark, pointed to the timing: “This drop could inspire buyers during what’s traditionally a busy season. If a base rate cut follows, more competitive mortgage deals could emerge – giving the market the boost it sorely needs.”
While today’s inflation data injects a dose of positivity into an otherwise cautious market, the sentiment across the mortgage industry is clear: it’s a step in the right direction, but the journey is far from over. With global volatility and domestic policy changes still in play, mortgage brokers and advisers have a critical role in helping clients adapt and thrive in a shifting landscape.
