Landbay conducted a survey among 105 mortgage brokers and found that they expected only two more base rate cuts in 2025, following higher-than-expected inflation data.
A majority of brokers (54%) predicted two more 0.25% base rate cuts this year, while just 14% expected three cuts.
Meanwhile, 26% anticipated only one more cut, and 4% thought there would be no more cuts at all, leaving the base rate at 4.5%.
Rob Stanton, sales and distribution director at Landbay, said: “The Bank of England has warned inflation could hit a fresh peak of 3.7% later this year.
“While much of this is down to high energy costs, some of it is down to the Government’s introduction of VAT on private school fees which has pushed overall inflation in the education sector to its highest point in nearly a decade.
“Transport costs are also rising with the bus fare cap increasing to £3. And food is getting more expensive, some of which is down to the packaging tax – that’s putting a renewed squeeze for households.”
Stanton added: “While headline inflation is so far above its 2% target rate, it would be a very bold move to cut borrowing costs – especially with the £25bn increase in employer national insurance contributions and 6.7% rise in the minimum wage due to come into effect from April.
“That will force businesses to pass on the higher costs of employment to consumers, raising their prices yet further.”
He said: “Brokers can’t see the future obviously, but the wisdom of crowds does give us some insight here and suggests that, when they’re talking to landlords, brokers should make it clear that the interest rate landscape has changed.
“The Bank of England is going to have to change its priorities in face of rising inflation and keep interest rates higher for longer.”
He added: “It’s well known that timing can make or break a deal in BTL, making broad product choice, easy application and fast decision making even more valuable to both brokers and landlords in such changeable market conditions.
“No matter the path of future interest rates, this has to remain a priority for lenders.”
