The Consumer Price Index rate (CPI) rate inflation remained at 3% in February.
This was before Israel and the US started their war against Iran, which has subsequently driven up costs of energy.
CAUTIOUS TERRITORY
Emma Hollingworth, chief distribution officer at LSL Financial Services, commented: “A flat inflation reading keeps the Bank of England firmly in cautious territory. With ongoing geopolitical tensions still feeding through to energy and shipping costs, policymakers will want clearer evidence that domestic price pressures are easing before committing to the next rate cut.
“Despite the lack of movement today, the backdrop for mortgage pricing has changed materially. Swap rates have been rising, reflecting market concerns about the durability of inflation. That means fixed‑rate mortgages are unlikely to fall meaningfully in the short term, even as lenders continue to compete hard for business.
“For brokers, this reinforces the importance of early engagement. With a large cohort of borrowers approaching the end of their fixed terms in 2026, advisers have a timely opportunity to guide clients through a market shaped by global uncertainty and rising funding costs.”
CALM BEFORE THE STORM
John Phillips, CEO of Just Mortgages and Spicerhaart, said: “Inflation holding firm in February is quite literally the calm before the storm as we anticipate and brace for a spike in inflation in the coming months.
“In truth, many are already overlooking today’s data in preparation of what is to come as the disruption caused by the conflict filters through to the UK economy.
“We’ve seen already a nailed-on cut turn into a hold and the promise of future cuts turn into the very real threat of rate increases. Even if the conflict stopped tomorrow, ‘Trumpflation’ is likely to linger on.
“We simply cannot put our heads in the sand and wait for it all to blow over. As we’ve seen in our latest figures for buyer registrations, valuation requests and mortgage appointments, clients still want and need support.
“While we are seeing thousands of products being pulled from shelves, either to be repriced or not to return, there are plenty of options still out there. As is often the case in uncertainty, the best course of action is to act early with quality advice and be prepared.
“Brokers play a crucial role in helping clients navigate a rapidly changing market, identify the best deals available and make informed decisions – particularly where opportunities exist to secure a better rate. Now more than ever, we need to keep reminding clients of this.”
LITTLE COMFORT TO MORTGAGE BORROWERS
David Hollingworth, associate director at L&C Mortgages, said: “The rate of inflation was expected to remain stable in February but today’s figures will be of little comfort to mortgage borrowers, who are already reeling from the impact of the conflict in March.
“The sharp change in outlook for inflation as a result of rising oil and gas prices has already sent mortgage rates substantially higher than at the beginning of March. Markets are anticipating that interest rates will remain higher for longer and are now factoring in interest rate rises. That’s a far cry from only a few weeks ago where an expectation of further cuts was the consensus.
“That swing is causing significant volatility and fixed rate mortgages continue to be priced higher by lenders. Those hikes keep on coming as many lenders enter their third or fourth round of product changes in the last two to three weeks.
“That has seen a surge in borrowers rushing to lock in a rate before further increases take hold. Our figures show that the increase in the average of the best remortgage rates from the 10 biggest lenders means that a £200k mortgage on a two-year fixed rate will cost almost £85p.m. more now than at the beginning of the month.
“With prices at the pump already higher, borrowers will also be nervous about the increase in energy costs expected in coming months. Today’s figures are therefore likely be viewed as the calm before the storm by homeowners.”
