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  • Writer's pictureMatthew Pigrome

The Impact of UK Inflation on Interest Rates: Navigating the Changing Mortgage Landscape

As the UK economy experienced an upsurge in inflation, there are significant implications for interest rates and, subsequently, the mortgage market. As inflation rises, the Bank of England responds by adjusting its interest rates to stabilise the economy. For potential homeowners and existing borrowers, understanding the connection between inflation and interest rates is crucial in making informed decisions.

In this blog, Mortgage321 will delve into how UK inflation affects interest rates, explore the current rising interest rate trend, and provide valuable insights for borrowers looking to secure the best mortgage deals amidst these changes.

Bank of England Base Rate verses Inflation
  1. UK Inflation and the Bank of England: Inflation measures the increase in the general price level of goods and services over time. When inflation rises above the Bank of England's target rate, currently set at 2%, it can trigger a response from the Monetary Policy Committee (MPC). The MPC is responsible for setting the Bank of England's base interest rate, which affects borrowing costs for individuals and businesses alike.

  2. Impact on Interest Rates: As inflation surges, the Bank of England may increase its base interest rate to combat rising prices and maintain economic stability. Higher interest rates make borrowing more expensive, affecting various types of loans, including mortgages. This can result in higher monthly mortgage repayments for existing borrowers and could impact the affordability of new mortgage applications.

  3. Rising Interest Rate Trend: In recent months, inflation in the UK has been on the rise, prompting the Bank of England to take action. As a result, interest rates have been increasing steadily, impacting both fixed-rate and variable-rate mortgages. Borrowers looking to remortgage or secure new home loans may encounter higher interest rates than seen in previous periods.

  4. Navigating the Changing Mortgage Landscape: While rising interest rates present challenges, Mortgage321 is dedicated to helping borrowers navigate this changing mortgage landscape. Our experienced team of mortgage experts keeps a close eye on market trends and the Bank of England's decisions, enabling us to provide tailored advice to our clients.

  5. Securing the Best Mortgage Deals: Despite the changing interest rate environment, there are still opportunities to secure favourable mortgage deals. By exploring various mortgage products and working with Mortgage321, borrowers can find competitive rates that suit their financial goals and circumstances.


As inflation continues to influence the UK's economic landscape, it's essential for borrowers to stay informed about the connection between inflation and interest rates. At Mortgage321, we remain committed to guiding our clients through these changes, ensuring they have access to the best mortgage solutions available. By working closely with our expert team, borrowers can make well-informed decisions that align with their financial aspirations, even amidst changing interest rate scenarios.

Disclaimer: This blog provides general information only and does not constitute financial advice. Borrowers are encouraged to seek personalised advice from mortgage professionals based on their individual circumstances.


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