A charity leader and his family whose mortgage is up for renewal next year said news of the inflation drop was a sign of “green shoots” but repayments would still be higher, forcing them to consider selling up and relocating.
Carl Knightly, who lives in South Croydon, said his five-year fixed-rate mortgage would end next summer and current new mortgage deals on offer would mean his family could be up to £1,000 worse off a month.
Even if interest rates do drop as a result of inflation, he fears it would not be to the level as previously, so he and his family are having to consider leaving London and moving further out to cut their costs.
The father-of-two told i: “We are regular people on decent incomes, but we are having to have these big conversations.
“We don’t know if it’s worth remortgaging and struggling or moving out and getting more for our money. We are seriously considering moving.”
The Office for National Statistics (ONS) announced on Wednesday the rate of Consumer Prices Index inflation fell to 3.9 per cent in November, down from 4.6 per cent in October and the lowest level since September 2021.
The drop has sparked speculation the Bank of England may now consider decreasing rates, which in turn could be good news for mortgage holders.
Work and Pensions Secretary Mel Stride told LBC Radio: “A greater decrease in inflation of course means that monetary policy might be loosened a little bit more quickly than it would otherwise be – in other words, interest rates coming down.”
Mr Knightly’s current mortgage deal, which is a fixed rate of 1.8 per cent, ends next August.
He and his wife, who works as a nurse, have been looking at current two-year and five-year fixed-rate mortgage deals and the best they could find was at 4.6 per cent.
“In terms of monthly repayments, we are going to be looking at the best part of £1,000 extra,” he said. “It’s completely awful the extraordinary amount of money we are going to have to pay.”
He said the drop in inflation was a sign of “green shoots” and that the economy did appear to be on a “good trajectory”.
“I think rates will probably drop a bit more,” he added, “but I don’t think it will go beyond three per cent.
“I think we are in for a rough ride.”
With two young children at primary school who are due to leave soon, he said the prospect of remortgaging and finding a large amount of extra money each month was “not the only driver but it was a key driver” in their discussions around selling up.