Borrowers across the country breathed a sigh of relief yesterday as the BBC, Sky News, the Telegraph and the Mirror reported the International Monetary Fund’s prediction that we will soon see the “return of ultra-low interest rates” in the near future, “once high inflation is brought under control”.
Such headlines, accompanied either by pictures of houses or people looking at the paperwork involved in paying for a house, gave the clear impression that mortgages will get cheaper because central banks, such as the Bank of England, will bring them back near zero when inflation goes down. (Headline inflation will drop sharply soon, because headline inflation is a year-on-year figure, and the very large rise in the energy price cap that took place on 1 April 2022 is now more than a year in the past.)
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