🏦 The economy: a surprise contraction, days before the Bank decides
Fresh figures out on Friday showed the UK economy shrank by 0.1% in April, its first monthly fall since August last year, after growth of 0.4% in February and 0.3% in March. The dip was driven by the services sector (the biggest part of the economy), and the Office for National Statistics pointed partly to the conflict in the Middle East, which pushed up energy and fuel costs and forced the cancellation of some events. Step back, though, and the economy still grew 0.7% over the latest three months, so it’s a wobble, not a slump.
The timing matters because the Bank of England’s next interest-rate decision lands this coming Thursday, 18 June. The base rate (the rate the Bank sets, which influences almost every other rate in the economy) has sat at 3.75% all year, and most economists still expect it to be held there, but the meeting isn’t the formality it might once have been.
What’s in the mix:
- Inflation (how fast prices are rising) eased to 2.8% on the latest reading, down from 3.3% the month before, closer to the Bank’s 2% target
- But at the last meeting the vote split 8 to 1, with one policymaker pushing to raise rates to 4%, and the Bank expects inflation to tick back up over the summer
- Higher energy prices linked to tensions in the Middle East are the main worry keeping a cut off the table for now
Governor Andrew Bailey has signalled the Bank is “in no rush” to move rates in either direction. Markets are pricing in a hold on Thursday, with any cut more likely later in the year.
What it means for you: nothing changes on your payment until the Bank actually moves. But if you’re on a tracker (where your rate follows the base rate up and down), a future change would feed through quickly, and if you’re on a fix, the decision shapes the deals on offer when you come to remortgage. Our guide to mortgage rates explains how the Bank’s decision feeds through to what you pay, and fixed vs tracker explains who’s most exposed.
🏠 The housing market: a widening north, south divide
The latest figures show UK house prices broadly flat. Halifax puts the average home at around £298,800, down a touch on the month but up 0.5% over the year. Nationwide, which measures things slightly differently, recorded its first monthly fall of the year in May, with annual growth slowing to 1.7%. Either way, the national picture is one of gentle cooling, but that average hides a striking split between the nations and regions.
- Northern Ireland: up around 7.8% over the year (average about £227,000), comfortably the strongest in the UK
- Scotland and the North: still posting steady annual gains
- London and the South East: softer, with parts of the South slipping back over the year
What it means for you: the national headline matters far less than your own local market. Where prices are softening, sellers are often more open to a sensible offer, especially on a home that’s been sitting a while. Where they’re still rising, you may need to move a little quicker. Our first-time buyer guide and affordability calculator help you sense-check the numbers for your area.
📉 Mortgage rates: the cuts keep coming
The fixed-rate price war rolled on this week. NatWest cut its fixed rates for the third time in a fortnight (from 8 June), with Barclays, Santander, Halifax, Coventry Building Society, Gen H and TSB all trimming selected deals too. Two things worth knowing:
- The sharpest 2-year fixes are now around 4.4% for borrowers with bigger deposits, the leading deal sits near 4.37% at 60% loan-to-value (with a fee), and five-year deals aren’t far behind
- The number of mortgage deals on the market has climbed back above 7,000 for the first time since March (around 7,130 products), including more choice at 90% and 95% loan-to-value, which matters if you’ve a smaller deposit
Behind the scenes, swap rates (the wholesale costs lenders use to price fixed deals) have drifted lower as inflation softened and energy-market nerves calmed, which is what’s given lenders room to cut. One honest caveat: that backdrop can shift quickly, so cuts can slow or reverse if the mood changes.
What it means for you: if your current deal ends within the next six months, this is a good moment to start looking. You can usually line up a new deal up to six months ahead and have it ready to start the day your fix ends, which keeps you off your lender’s pricey Standard Variable Rate (SVR). Our remortgage guide and what happens when your fixed rate ends cover the timing.
💷 Money: savings rates are holding firm
A bit of news beyond mortgages. While mortgage rates have been falling, savings rates have stayed surprisingly strong. The best easy-access accounts are paying around 5%, top one-year fixes are close behind, and a few regular-saver accounts go as high as 7% on smaller monthly amounts. Savers clearly noticed, around £12 billion went into ISAs in April alone.
It’s also worth a reminder that this 2026/27 tax year is the last in which under-65s get the full £20,000 cash ISA allowance, from April 2027 it’s due to drop to £12,000.
What it means for you: if you’ve got savings sitting in an ordinary account earning next to nothing, it’s a good moment to shop around, and to use a tax-free ISA before the allowance shrinks. If you’re saving specifically for a first home, a Lifetime ISA can add a 25% government bonus on top, our Lifetime ISA guide explains how it works and the rules to watch.
🛡️ Could your mortgage survive a few months without your income?
Here’s a question most of us never stop to ask: if illness or an accident stopped you working for six months, how would the mortgage get paid? For many households the honest answer is “savings, for a while, then we’re not sure”. That gap is exactly what income protection is designed to cover.
In plain English, income protection is an insurance policy that pays you a regular, tax-free monthly amount if you can’t work because of illness or injury. It keeps paying until you’re well enough to return to work, or until the policy ends, so it’s built to cover ongoing commitments like your mortgage, bills and food, not a one-off lump sum. A few things people often get wrong:
- It’s not the same as critical illness cover, which pays a lump sum for specific serious conditions. Income protection is broader, it can pay out for things like a bad back or stress that keep you off work, not just named illnesses.
- You choose a waiting period (how long before it starts paying), a longer wait means a cheaper premium, and it can be lined up with any sick pay from your employer.
- The self-employed, who usually have no sick pay at all, often have the most to gain.
It’s the kind of cover that feels easy to put off, until it’s the only thing standing between a health setback and falling behind on the mortgage. Our guide to income protection insurance walks through how it works, and life insurance vs critical illness explains how the different types of protection fit together.
Already a homeowner? It’s worth a five-minute sense-check that your cover still matches your mortgage and your life. Debbie at DS Financial can review what you have (or don’t) and explain your options, no pressure, no jargon. Just drop her a line.
That’s your week. If anything raises a question about your own situation, just drop us a line, or have a no-pressure chat with Debbie at DS Financial.
General information, not financial advice. Figures correct at the time of writing (13 June 2026).
Sources: ONS GDP (April 2026), Bank of England base rate, Halifax House Price Index, Nationwide House Price Index, Moneyfacts, Moneyfacts (savings).