The surprise uptick in UK inflation to 3.5% in the year to April has sent ripples through the mortgage and property sectors, as professionals warn of knock-on effects for interest rates, affordability, and market momentum. While the rise was broadly anticipated, its scale has sparked renewed debate over whether the Bank of England can stick to its expected rate-cutting path.
From developers and brokers to lenders and trade bodies, industry leaders are bracing for a more uncertain summer – just as the housing market traditionally gathers steam.
Interest rate path in question
Daniel Austin, CEO and co-founder at ASK Partners, highlighted how global instability and tax policy are complicating the Bank of England’s tightrope walk.
“Today’s sharp rise in UK inflation demonstrates how the balancing act between volatile global conditions, driven by Trump-era tariff uncertainty and domestic tax shifts, is becoming harder to maintain. Many will be asking whether the Bank of England’s rate pause can hold.
“For homeowners and buyers, hopes of lower borrowing costs remain high, but persistently elevated fixed mortgage rates could delay any real relief. While house prices have stalled since the end of the stamp duty holiday, any drop in swap rates, sparked by Trump-related volatility, could revive momentum if it feeds into better affordability.
“Investors and developers are watching closely. Appetite remains strong in resilient sectors like co-living and build-to-rent, where supply constraints keep capital active. But a stable, downward rate trajectory is key. If rate cuts come, it could reignite activity, but with uncertainty and costs still high, staying nimble is essential.”
Older borrowers seek stability
Simon Webb, managing director of capital markets and finance at LiveMore, noted that while inflation remains a challenge, the market has already priced in some of the impact.
“While today’s inflation figures show that price pressures remain, they also highlight the resilience of the UK economy in navigating prolonged volatility. For older borrowers, this environment reinforces the value of tailored financial products that provide stability and flexibility.
“Although a base rate cut may be delayed, the market has already priced in some of this expectation, and many lenders – including LiveMore – continue to offer competitive rates and innovative solutions for the over-50s. We’re seeing growing demand from older homeowners who want to make the most of their property wealth in uncertain times, whether to support retirement, help family members, or simply improve quality of life.
“Inflation may still be a factor, but so is adaptability – and the later life lending market is stepping up to meet that challenge.”
Brokers stay busy despite inflation pressures
John Phillips, CEO of Just Mortgages and Spicerhaart, pointed to April’s seasonal factors as a major contributor to the CPI jump.
“A rise in inflation was hardly a shock given the fact that April marks the start of the new financial year and brought with it wave of inflationary price hikes – most notably to energy and water bills and as businesses pass on both the rise in national insurance contributions and in the minimum wage.
“The big question is how will this impact the future path of interest rates. What we do know is the central bank has been clear it expected this rise in inflation and knows full well it is likely to creep up further before eventually coming down. The real elephant in the room is the impact of Trump’s tariffs on global economies and international trade which is still unknown. With plenty of uncertainty, it’s likely we could see a pause in June before returning to cuts later in the year.
“Base rate strategy has long been a tug of war between managing inflation and stimulating economic growth. While inflation has risen and is expected to increase, it does feel like the overall momentum is still shifting towards stimulating growth – particularly with the threat of economic uncertainty on the global stage. Borrowers are seizing the opportunities available to them now with significant rate reductions across the market and increasing innovation. Brokers remain busy as an ever-changing market continues to demonstrate the value they can offer in navigating options and securing the best possible deal.”
Stamp duty bounce a short-term inflation driver
Nick Hale, CEO at Movera, pointed to the knock-on effects of the March stamp duty deadline.
“Today’s CPI figures from the ONS, showing a rise in inflation, serve as a stark reminder that the path to economic stability is rarely linear. A cut to the base rate has always been a tug of war between stimulating growth and keeping inflation in check – and right now, that balance feels even more precarious.
“Some of the uptick may well be down to the March stamp duty deadline – the first real implementation of Labour’s Budget last autumn. As expected, it prompted a flurry of activity in the housing market, driving short-term demand not just for property, but for the many services and goods tied to moving home. That momentum can temporarily feed through to inflation, even if it’s unlikely to persist.
“For borrowers, this will do little to ease concerns around affordability. But at Movera, we remain focused on giving movers the confidence and certainty they need – whatever the economic weather.”
Affordability still under pressure
Richard Pike, chief sales and marketing officer at Phoebus, stressed how stubborn inflation impacts affordability across the board.
“Today’s inflation data reinforces how persistent price pressures remain in the UK economy, driven largely by a rise in regulated prices like water and utility bills, which came into force last month. With wage costs also high, expectations of an imminent base rate cut are likely to be tempered.
“For the housing and mortgage market, this adds to the sense of uncertainty. A longer wait for rate cuts means continued pressure on affordability, both for prospective buyers and those coming to the end of fixed deals. While lenders have shown a willingness to compete, particularly in the remortgage space, volume recovery may be more gradual.”
Buyers still motivated despite inflation bump
Ben Thompson, deputy CEO at Mortgage Advice Bureau, urged buyers not to lose confidence.
“Encountering this particular bump in the road was widely expected and forecasted. However, inflation rising to 3.5% shouldn’t discourage homebuyers from taking their first, or next, step on the property ladder, especially with summer proving the most popular time to move.
“In fact, our research revealed that 72% of our customers moved to a new property in the summer of 2024, which was actually just before mortgage rates started falling from their recent highs.
“With more innovation across the market than ever before, including a host of sub-4% rates, there’s never been a better time to buy. Speaking to a broker is essential, as with their market insight and expertise, you may actually end up being mortgage ready sooner than you think.”
Housing sector central to growth recovery
Nathan Emerson, CEO at Propertymark, said inflationary setbacks shouldn’t derail broader growth efforts.
“Today’s numbers will likely come as a disappointment to many across the country. It remains vital that the UK economy delivers growth, to help keep inflation on track with the Bank of England’s 2 per cent target or below. There is positive news that the wider global economy is responding to a calming down of international trading relationships, which will prove influential to the domestic economy.
“Housing plays a central role in boosting overall growth in the UK, and with the summer months being historically busy for the housing market, it’s likely that momentum will continue throughout this period, despite the economic turbulence across the first quarter of 2025.
“Inflation increasing may deter the Bank of England from dropping interest rates on 19 June; however, when the time is right, we hope to see them fall and more competitive mortgage deals appear across the lending spectrum.”
Developers urge long-term view
Martyn Smith, CEO of Black & White Bridging, cautioned that rising funding costs are hitting viability at a difficult time for the sector.
“After last month’s encouraging dip, a rise in inflation to 3.5% is a reminder that the path to economic stability is rarely linear. While it may delay hopes of an imminent base rate cut, the broader trend toward price moderation could still reassert itself in the months ahead.
“That said, renewed pressure on funding costs comes at a challenging time. Developers continue to face tight margins and sluggish planning pipelines, and even small changes in sentiment can make a big difference to project viability.
“It’s vital that the government doesn’t let short-term volatility derail long-term progress. We need sustained policy support and clear incentives to keep Britain building – because the demand for new housing isn’t going away.”
