'Best thing' to do as inflation trend 'could have serious impact' on mortgage applicants
Data from the Office for National Statistics (ONS) released this week has revealed the UK inflation rate hit 2.5 percent in the year to June. This is the highest for nearly three years.
James Andrews, senior personal finance editor at money.co.uk, said: “This is the second month in a row that inflation has risen above target and, if that trend continues, it could have a serious impact on anyone currently applying for a mortgage.
“There are two main reasons for this.
“The first is that rising inflation tends to go hand in hand with rising interest rates – and if the Bank of England does act to bring prices under control by raising the base rate, it’s almost certain lenders will pass this on through higher mortgage charges too.
“The second reason rising prices can affect your mortgage chances is that banks look at your bills when deciding whether to lend to you or not – and if your bills are taking up more of your wages as a result of price rises, that means you’re less likely to be offered a deal.”
So, what does Mr Andrews suggest potential homeowners and those looking to remortgage do?
