The Bank of England (BoE) has announced a fall in the rate of inflation to 1.2% in September 2014, the lowest level for five-years.
The figures have come as a surprise to many and coincide with a fall in UK unemployment to 6% – a six-year low.
Rate rises on hold?
The fall in inflation has largely been attributed to a supermarket price war and a drop in the price of petrol, and had led to fresh speculation about a potential rise in interest rates.
The new inflation figures have cast doubt on such predictions, with many now suggesting rate rises could be further away.
Speaking to the Guardian, Howard Archer, an economist at IHS Global Insight said: “We have long been expecting the Bank of England to first raise interest rates from 0.5% to 0.75% in February – but it is looking ever more likely that the Bank will delay acting until nearer mid-year.”
Where does this leave homeowners?
As we reported earlier, the rosy economic climate has helped keep mortgage rates low, with some expecting initial mortgage rates to fall below 2% before the end of the year.
The low level of inflation could help keep mortgage costs low for another year, making it a good time for first-time buyers looking to get on the property ladder, and those looking to remortgage.
First time buyer – Get on the property ladder with a low rate
Help to buy – Learn all about the government’s Help to Buy scheme, where a deposit as low as 5% could get you a home
Remortgaging – Lock in a low rate for the next few years