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Antony Antoniou – Luxury Property Expert

Mortgage Rates Set to Fall as Hiking Cycle Nears Its End

Mortgage Rates Set to Fall as Hiking Cycle Nears Its End

Growing expectations that the Bank of England will conclude its interest rate rises, giving homeowners hope.


As the Bank of England’s monetary policy decision looms, there’s a glimmer of hope for homeowners as major lenders in the nation prepare to cut rates on fixed mortgages. This trend suggests that the Bank of England may be nearing the end of its cycle of interest rate hikes, which has been a cause of concern for many.

Lenders Respond to Growing Optimism

Last week, HSBC took the lead by cutting its rates by an average of 0.15%, and following suit, Nationwide reduced rates by up to 0.35% on Friday. These moves indicate that pressure on policymakers to raise rates might be easing.

Expectations for This Week’s Rate Hike

However, despite these hopeful signs, most economists still expect the Bank of England to announce a 0.25% increase in the base rate this week, marking the 14th consecutive hike. This increase would be smaller than the unexpected 0.5% point hike in June, and experts believe that the recent UK inflation data might have played a role in moderating the pressure on the central bank.

Inflation Data Provides Breathing Room

The Consumer Prices Index (CPI) inflation stood at 7.9% in June, down from 8.7% in May, and it is the lowest rate recorded since March 2022, as reported by the Office for National Statistics (ONS). The lower inflation figures mean that the Bank of England may not need to push interest rates as high as initially feared, as it strives to bring inflation down to its target rate of 2%.

Contrasting Global Actions

This situation in the UK stands in contrast to the actions of other central banks worldwide. The European Central Bank (ECB) and the US Federal Reserve both raised their respective interest rates by 0.25% to control rampant inflation, marking two-decade highs. Economists in the UK predict that a quarter-point increase would take interest rates to 5.25% this week, with the possibility of at least one more rate hike in the near future.

Optimism for the End of Rate Hikes

Despite the expected increase, there’s optimism that the present cycle of rate hikes will conclude soon. Economists from reputable sources, like Oxford Economics and Capital Economics, foresee another rate hike in September, taking the rates to 5.5%. However, they believe that a mild recession and easing wage growth and core inflation will likely prevent further rate hikes beyond that point.

Hope for the UK Housing Market

This growing optimism about the end of interest rate hikes is good news for the UK housing market. Riz Malik, director of mortgage brokers R3 Mortgages, commented on the current sluggishness in the market. However, he expressed hope that with interest rates approaching their peak, there could be positive changes. Some lenders have already started lowering mortgage rates marginally due to favorable market conditions. If the expectation is that interest rates won’t rise much higher, property transactions could increase as borrowing costs improve.


In conclusion, homeowners in the UK can be cautiously optimistic as mortgage rates are showing signs of falling, indicating that the Bank of England’s interest rate hiking cycle may soon come to an end. Although a rate increase is expected this week, there’s hope that it will be the last in the current cycle, bringing some relief to the housing market and borrowers. As the situation continues to evolve, it’s essential for potential buyers and homeowners to stay informed about economic developments and mortgage offerings from lenders to make the most informed decisions for their financial future.

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