The Bank of England holds its key interest rate at 3.75% on Thursday, with economists warning inflation could stay above 3% for several months despite the recent US-Iran peace deal that sent oil prices tumbling to a three-month low below $83 per barrel. The mortgage market has finally caught a break—Nationwide slashed rates by 0.28 percentage points, its second cut in a week, as swap rate volatility eases.

Headwinds

• Stubborn inflation: Price...