The UK inflation rate rose by 7.9 percent in the 12 months to June 2023, down from 8.7 percent in May, which could spell good news for mortgage holders.

The Bank of England has increased the Base Rate 13 times consecutively since the start of last year to stem surging prices, which has, in turn, sent borrowing costs soaring.

The average two-year fixed rate mortgage deal hit a staggering 6.7 percent on Monday according to experts at comparison site Uswitch, while average Standard Variable Rates (SVR) remain at an eye-watering 8.45 percent.

However, experts are saying there is now less pressure for the Bank of England to increase the Base Rate much higher, given inflation’s slower tempo.

Core inflation, which strips out the extra risky gadgets reminiscent of meals and vitality, remained excessive at 6.9 p.c however is marginally decrease than May’s 7.1 p.c, which signifies that the cycle of Base Rate rises might lastly be having the supposed impact.

Lewis Shaw, founding father of Mansfield-based Shaw Financial Services stated: "This inflation data is excellent news for everyone, mortgage holder or not. There’s still a long way to go, but to see headline CPI fall and, crucially, core inflation reduce albeit by a smaller margin, is something we’ve all been hoping for and may suggest we’ve now turned the corner.”

Mr Shaw said this could see the Bank of England raise the Base Rate by 0.25 percent in August, as opposed to the 0.5 percent rise seen in July.

Mr Shaw continued: “For mortgage holders, this is great news. I’m going out on a limb here to say fixed mortgage rates have peaked. We may see a little shuffling around but the continued painful increases are over.

“That doesn’t mean that we’re out of the woods, however, it does mean we can now start to see the faint glimmer of light at the end of the tunnel.”

Gary Boakes, director of Salisbury-based mortgage broker, Verve Financial added: "This might be essentially the most vital set of inflation information in years. For inflation to have fallen additional than expectation certainly means the stress is off the Bank of England, however the ball is now of their courtroom.

“Hopefully, we will see a positive impact across markets and reductions in swap rates, which in turn could see a drop in mortgage rates."

Mortgage market swap rates are the price lenders have to pay financial institutions when securing fixed rate funds and have to be large enough to mitigate any risk associated with offering fixed rate mortgages.

According to specialist property lending experts at Octane Capital, these are generally based on Gilt yields which reflect what the market anticipates will happen about interest rates further down the line.

According to Octane Capital’s research, swap rates increased at an average monthly rate of 18 percent per month in 2022. So far in July, this average monthly rate of growth has slowed to just nine percent per month.

But while this could be painting a largely positive picture for future mortgage rates, a mortgage advisor at Corsham-based Maggs Financial Services pointed out that the days of “super-low” rates of interest might be a factor of the previous.

Russell Maggs stated: “The days of super-low interest rates are behind us and we need to get used to living in a world of higher monthly mortgage payments. We're also likely to see increased options in the market to fix monthly payments for the term of the mortgage as you see in the US.”

CPI continues to be removed from Prime Minister Rishi Sunak's goal to halve inflation to five.3 p.c by the top of the 12 months. Responding to the news, Chancellor Jeremy Hunt stated: "We aren't complacent and know that prime costs are nonetheless an enormous fear for households and companies."

When asked if the decline in inflation means the Bank should ease up on interest rate hikes, Mr Hunt said: "What we have now seen is the Bank has taken very troublesome choices and the Government has taken very troublesome choices within the autumn assertion to guarantee that we actually do begin to deliver down inflation. We are seeing the primary fruits of that however there is a lengthy method to go and we have to keep in mind that households are nonetheless feeling plenty of stress."

Economist James Smith at ING said it will be a "shut name" whether the Bank votes for a quarter or half percentage point rise in August, with record wage growth being paid closer attention to.

He said: "Is this sufficient to persuade the Bank of England to go for a 25 foundation level charge hike in August? We assume it in all probability will - however it will be a detailed name. The Bank may also be wanting on the current wage information, which was stronger than anticipated however got here alongside figures displaying a renewed cooling within the jobs market and enhancements in employee provide."