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Fear was back in the air last week due to disappointing economic news and a sense of growing instability within the government.

Inflation in December was 4% (above market estimates of 3.8%) and senior members of the Tory party resigned over its immigration plans.

Both, understandably, could have unnerved buyers and sellers.

But while political rifts are indeed becoming more entrenched, headlines about rebounding inflation need to be treated with scepticism.

The increase in the cost-of-living was largely due to a rise in tobacco duty, and it came the day after news that . Wage growth drives core inflation, which has been the Bank of England鈥檚 biggest headache.

In other words, there was nothing to fundamentally alter the downwards trajectory of inflation towards its 2% target.

At the start of last week, financial markets were pricing in five rate cuts of 0.25% this year and that hadn鈥檛 changed by Friday morning, particularly after some soft retail numbers.

With only eight meetings of the Bank of England鈥檚 Monetary Policy Committee in 2024, what if five cuts don鈥檛 happen?

It鈥檚 a fair question given how cautious the Bank has been on the subject of rate cuts, but lenders price fixed-rate mortgages based on market expectations, irrespective of whether they happen or not.

Rates have dropped meaningfully in recent weeks as inflation has fallen faster than expected, with the cheapest five-year fixed rates now under 4%.

博鱼体育集团 Frank has revised up its house price forecasts for this year but any mortgage rate cuts in the near future are likely to be less eye-catching, said Simon Gammon, head of 博鱼体育集团 Frank Finance.

鈥淭he lenders came out strongly after Christmas to stimulate the market, but I suspect rates are not far off their low point for the next few months,鈥� said Simon.

While any fears around the trajectory of mortgage rates feel overblown, the political outlook is getting messier by the week.

The government won a key vote on its Rwanda bill last week, but Rishi Sunak faces a protracted game of legislative ping pong with the House of Lords over his plans and more letters of no confidence in his leadership being submitted from the back benches.

The only reason the rebels may not force the Prime Minister鈥檚 resignation as they did with Theresa May in 2019, is that a general election is so close.

We also learned last week that the election result may not prove to be as clear-cut as polls currently suggest.

Under constituency boundary changes, in the vote than Tony Blair achieved in 1997 to win a majority.

Given how disconnected the electorate is from the two main parties, how divided their traditional voter bases are on key issues and the emergence of new challengers across the political spectrum, it must raise the prospect of a hung Parliament.

The Liberal Democrats could play a key role in forming a coalition government, but its leader Ed Davey has to win his own seat first. could be a former deputy-postmistress who has criticised him for his role in the Post Office scandal.

This, of course, could all be taking place against the backdrop of Biden versus Trump part two in the US.

It makes the interest rate outlook seem positively serene by comparison.