UK Mortgage Market perking up

The mortgage market delivered more good news as approvals rose more than expected in February, hitting a 17-month high. This follows the trend in the housing market were mortgage rates have declined from the summer highs of last year. According to the Bank of England, UK mortgage approvals reached their highest levels since September 2022. UK shop price inflation also fell below 2% in March. This is the first time it has hit that threshold since December 2021. According to the British Retail Consortium, shop price inflation eased to 1.3% in March versus 2.5% in February.

This will be welcome news to policymakers as they consider rate cuts later this year. It will also be a relief to households and businesses that have tried to keep up with the cost of living crisis. For context, food inflation was 15% a year ago. The OBR has forecast that inflation will fall below 2% over the coming months so gilts could rally even further still.

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