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Many factors determine when mortgage rates will go down and by how much. Read on for what’s happening now and predictions for the future to help you decide what to do with your mortgage.
It’s widely predicted that mortgage rates will fall over 2025. However, there are many factors that influence what happens with mortgage rates which means there’s no guarantee of when mortgage rates may fall or by how much.
In April 2025, many lenders have trimmed mortgage rates. However, experts have warned that due to stubbornly high inflation, mortgage rates may stay higher than was previously predicted.
David Hollingworth at L&C Mortgages said on 20 March 2025, ‘Lenders remain highly competitive and have continued to make small adjustments to improve rates wherever possible. We could see that trend continue without necessarily resulting in huge drops in rates.
‘Fixed rates have already priced in some further reductions and the Bank of England has consistently suggested that rates will fall further. However, this is still expected to be a gradual process, and unless there is a marked shift in the Bank’s messaging, mortgage rates should remain relatively stable in the near term.’
Get fee free mortgage advice from our partners at L&C. Use the online mortgage finder or speak to an advisor today.
The Bank of England held interest rates at 4.5% in March 2025. This follows interest rates cuts in February 2025, November 2024 and August 2024, when the base rate was first cut from 5.25%.
It’s widely expected that the Bank of England’s Monetary Policy Committee will cut interest rates in 2025. Markets are currently pricing in two interest rates cuts this year with the base rate expected to fall to 4% by the end of the year. This is an improvement from the start of the year when markets were only pricing in just one cut.
However, what happens with interest rates will depend on what happens with inflation. In March 2025, Chancellor Rachel Reeves confirmed in her Spring Statement that inflation is predicted to average 3.2% in 2025. This is higher than the 2.6% the Office for Budget Responsibility had previously forecast and led to predictions that interest rates will fall more slowly.
As we go through 2025 you can keep up to date by bookmarking our guide to best mortgage rates in the UK or signing up to our weekly newsletter.
The Bank of England sets the base rate and it’s important to homeowners because it acts as a benchmark for the cost of borrowing money. As a general rule, if interest rates fall, mortgage rates will fall too.
How changes in interest rates affect your mortgage depend on your circumstances:
If you’re shopping around for a new mortgage or want to remortgage, the mortgage rates available should improve if interest rates fall, although this isn’t guaranteed.
If you’re on a fixed rate mortgage, the amount you’ll pay on your monthly mortgage payments will stay the same during your initial term – usually 2 or 5 years. So your mortgage payments won’t change if interest rates go up or down.
If you’re one of the estimated 600,000 households on a tracker mortgage deal and interest rates are cut, your mortgage payments will fall as the rate you pay on your mortgage rises and falls in line with the Bank of England base rate.
While if you’re on a discounted variable rate, you’ll pay a rate that’s lower than the lender’s Standard Variable Rate. If your lender decides to pass on the cut in interest rates, your mortgage payments will fall. But it won’t necessarily pass on all or any of the cut.
According to UK Finance, there are around 1.1 million households on their lender’s standard variable rate. If this includes you, if your lender decides to reduce its SVR if interest rates fall, the amount you’ll pay will fall. But again, the lender may not pass on all or any of an interest rate cut. And if you are on your lender’s SVR, you should know these rates can be extremely expensive, so check your deal now to see if you can save by remortgaging.
KEY INFORMATION
Lenders that have recently reduced mortgage rates in April 2025 include:
Stay up to date with our Best mortgage rates guide.
On 28 March 2025, the average mortgage rates according to Rightmove are:
In terms of current deals available, in April 2025, the best rate on a 2 year fixed rate mortgage is from Halifax at 4.06%. Max LTV 60%. Scheme fees: £1,099. Purchases only. For more information on the best mortgage rates available for different types of mortgages, read our guide to the Best mortgage rates.
Get fee free mortgage advice from our partners at L&C. Use the online mortgage finder or speak to an advisor today.
The wider global context and economic factors have an impact on mortgage rates in the UK in a number of ways, for example:
Yes, 2025 is a good time to remortgage, broadly speaking. But whether or not 2025 is a good time for you to remortgage will depend on your personal circumstances. Here’s what you need to consider:
KEY INFORMATION
Half of UK mortgage holders could see their payments increase over the next three years, due to the increased cost of borrowing the Bank of England has reported in its Financial Stability Report – November 2024.
It expects around 4.4 million mortgages to see payments rise by 2027, including £500-per-month hikes for around 420,000 households. However, 27% are expected to see a decrease in payments.
But if your new mortgage is going to cost more than your current one, it’s still important to start the remortgage process. If you don’t, you’ll end up on your lender’s standard variable rate which can be very expensive. So if your mortgage deal ends in the next six months, lock in a rate today then keep it under review.
Here’s how much remortgaging could cost you based on these scenarios:
The average 2 year fixed rate mortgage in April 2023 was 5.35%. By comparison, the average 2 year fixed rate mortgage on 28 March 2025 was 4.87%.
Here’s how much you’ll pay at these rates in the initial term if you borrow £200,000 over 25 years:
| Amount borrowed | Monthly mortgage payment at April 2023’s average rate of 5.35% on a 2 year fix | Monthly mortgage payment at April 2025’s average rate of 4.87% on a 2 year fix | Monthly saving if you remortgage |
|---|---|---|---|
| £200,000 | £1,210 | £1,154 | £56 |
See instantly how much your monthly mortgage payments may be with this free mortgage cost calculator
The average 5 year fixed rate mortgage in April 2020 was 2.74%. By comparison, the average 5 year fixed rate mortgage on 28 March 2025 was 4.73%.
Here’s an illustration of how much you’ll pay during the initial term at these rates if you borrow £200,000 over 25 years. We also show how much you’ll pay if you do nothing and roll onto your lender’s SVR, using the average SVR of 7.99%.
| Amount borrowed | Monthly mortgage payment at April 2020’s average 5 yr fix of 2.74% | Monthly mortgage payment at April 2025’s average 5 yr fix at 4.73% | How much more you’ll pay per month by remortgaging | Monthly mortgage payments on the average SVR of 7.99% | How much more you’ll pay per month if you don’t remortgage and move to the SVR |
|---|---|---|---|---|---|
| £200,000 | £922 | £1,138 | £216 | £1,542 | £620 |
These tables are based on average rates; depending on your circumstances and your deposit size/ amount of equity in your home, you may get access to better rates. So it’s a good idea to get an expert to explain your options. They’ll also factor in any fees you need to pay too so you can find the best deal overall.
Get fee free mortgage advice from our partners at L&C. Use the online mortgage finder or speak to an advisor today.
More mortgage borrowers are opting for shorter fixed deals, research by Santander found. Its research shows that in final three months of 2024, 65% of customers opted for a 2 year fixed rate mortgage, compared to 27% choosing a 5 year fixed rate mortgage.
This is a shift because in recent years, the lender says its customers have tended to show a 60/40 split in favour of 5 year fixed rate deals.
Whether a 2 or 5 year fixed rate mortgage is best for you will depend on your circumstances.
Paula Higgins, Chief Executive of the HomeOwners Alliance, says, ‘If we’ve learned one thing in recent years it’s that no one really knows what’s going to happen next with mortgage rates.
‘So don’t delay taking action. If your current deal ends in the next few months, speak to a fee-free mortgage broker who will find you the best mortgage deal for you. Then after you lock in a rate they can then keep the rate under review in case a better deal comes up before you need to switch.
‘And if you’re coming off a cheap fixed rate, don’t let the higher mortgage rates available today put you off remortgaging: if you do nothing when your current mortgage deal ends and roll onto your lender’s standard variable rate you could end up paying hundreds of pounds more each month on your mortgage.’
Yes, mortgage rates are expected to go down in the UK, based on current predictions of what’s expected to happen with interest rates. As we explain above, as a general rule: if interest rates fall, the mortgage rate prediction would be for mortgage rates to fall too. However, whether or not this prediction happens will depend on other factors such as what happens with inflation.
Also, gross lending in the mortgage market is expected to increase by 11% in 2025, according to a forecast by UK Finance.
KEY INFORMATION
The Office for Budget Responsibility‘s most recent forecast in March 2025 was that average interest rates on the stock of mortgages are expected to rise from a low of 2% in 2021 to a peak of 4.7% in 2028 across all properties where they will stay until 2030.
This increase is due to more households coming off cheap fixed rate deals and needing to move onto more expensive rates.
Here’s an illustration of how your mortgage payments may increase if you’re coming off a cheap fixed deal.
We compare what you’d pay each month at 2.74% – the average 5 year fixed rate mortgage in April 2020 with what you’ll pay each month at 4.73% – the current average 5 year fixed rate mortgage, based on a 25 year term.
| Mortgage balance | Monthly mortgage payment on 2.74% mortgage rate* | Monthly mortgage payment on 4.73% mortgage rate** |
| £100,000 | £461 | £569 |
| £150,000 | £691 | £853 |
| £200,000 | £922 | £1,138 |
| £250,000 | £1,052 | £1,422 |
| £300,000 | £1,382 | £1,707 |
| £350,000 | £1,613 | £1,991 |
| £400,000 | £1,843 | £2,276 |
Use our mortgage cost calculator to see instantly how much more or less you’ll pay on your mortgage if interest rates increase or decrease.
Waiting for mortgage rates to go down before getting a mortgage can be risky for a number of reasons.
So if your current mortgage deal ends in the next 6 months, and certainly if it ends in the next 4 months, you should start the remortgage process now instead of waiting in case mortgage rates go down.
By locking in a rate now you can keep it under review to see if a better deal comes up before you switch to your new deal. Award-winning mortgage brokers L&C offer this Rate-Check service for free
Choosing between a fixed mortgage, where you’ll pay a fixed rate for a set length or time, or a tracker mortgage where the amount you’ll pay will go up and down in line with the base rate, may seem a tricky decision. You may also consider a discounted mortgage, this will track under the lender’s standard variable rate.
In April 2025, generally speaking if you’re looking for a variable rate deal, you’ll pay more initially than you would on a fixed deal in the hope that you’ll end up paying less overall if interest rates fall in the future.
In April 2025, the best rate on a 5 year fix is from First Direct at 3.99% (max LTV 60%, scheme fees £490, remortgages only). Here’s how much it would cost you each month in the initial term if you take out a £200,000 mortgage over 25 years on this deal.
| Amount borrowed | Monthly mortgage payment |
|---|---|
| £200,000 | £1,055 |
By comparison, in April 2025, the best 5 year variable rate is Barclays’ Base + 0.60% which has an initial rate of 5.10%. (max LTV 60%, scheme fees £999.) Here’s how much you’ll pay each month in the initial term if you borrow £200,000 over 25 years at this rate.
| Amount borrowed | Monthly mortgage payment |
|---|---|
| £200,000 | £1,181 |
However, as this is a variable rate mortgage, the amount you’ll pay will change if interest rates change. Here’s how much you’ll pay each month on this mortgage if interest rates are cut from the current rate of 4.50%.
| Interest rate | Rate you’ll pay (Base + 0.6%) | Monthly mortgage payment |
|---|---|---|
| 4.25% | 4.85% | £1,152 |
| 4% | 4.6% | £1,123 |
| 3.75% | 4.35% | £1,095 |
| 3.5% | 4.1% | £1,067 |
| 3.25% | 3.85% | £1,039 |
Although while interest rates are predicted to fall, if they increase, so will your mortgage payments.
When it comes to your mortgage you need to consider what’s best for your individual circumstances. So speak to a fee-free broker so they can explain your options and find the best mortgage deal for you.
Get fee free mortgage advice from our partners at L&C. Use the online mortgage finder or speak to an advisor today.
Product transfers are expected to be increasingly common in 2025. UK Finance, the trade body which represents the banks, said it expects product transfers will grow by 13% this year. Here’s what you should consider when deciding whether to remortgage with a different lender or your existing one.
| Switching lenders | Staying with current lender | |
|---|---|---|
| Can you access the best mortgage rates? | Yes | Not necessarily. You’ll be limited to the rates your lender offers |
| Do you need a mortgage valuation? | Yes. You may need to pay for it | No |
| Is there legal work involved? | Yes. You may need to pay for it | No |
| Is there an affordability check? | Yes | Not usually if you’re borrowing the same amount for the same term |
| How quick is the process? | Allow 3 months | Generally around a week |
When it comes to switching lenders or staying with your current one, make sure you get advice. Speak to a fee-free mortgage broker and they’ll find the best deal for your circumstances.
Read more tips in our guide Mortgage advice for first time buyers.
House price predictions for 2025 vary from house prices increasing from 1.1% to increasing by 4%. Read more in our guide House price predictions 2025: How much will prices go up by?
Stay up to date with what’s happening with house prices in our monthly House Price Watch.
These factors can help determine whether you’ll get access to cheapest mortgage rates:
Yes, it’s always worth speaking to a mortgage broker. Not only will they be able to explain your options to you but they may also have access to exclusive deals too. But beware, some brokers charge fees. So speak to a fee-free broker like our partners at L&C.
If you’re currently on a cheap fixed rate mortgage, these mortgage rate predictions may understandably make you feel quite anxious because you’ll likely have to pay a higher rate on your next mortgage. The average rate on a 5 year fix in April 2025 is 4.73% which is much higher than the average rate on a 5 year fix in April 2020, which was 2.74%.
So if you’re currently on a cheap fix, here’s what you need to do:
Get fee free mortgage advice from our partners at L&C. Use the online mortgage finder or speak to an advisor today.
If you’re struggling to pay your mortgage you should get help as soon as possible. You’ll find useful advice on the government-backed MoneyHelper website:
When it comes to changes in interest rates, other types of borrowing are affected in a similar way. If interest rates go up, borrowing of any type generally gets more expensive, while when interest rates are cut, borrowing generally gets cheaper. However, this is in general terms as the amount you’ll pay on things like credit cards and loans will depends on a number of factors including your credit history.
When interest rates go down, lenders usually reduce the amount of interest they’ll pay on savings accounts.
In recent years, the UK has had one of the highest interest rates in the G7. The European Central Bank (ECB) started to cut its main interest rate for the eurozone in June 2024 from an all-time high of 4%. After a series of cuts it now stands at 2.75%. While the US’s central bank, the Federal Reserve, has held interest rates following cuts at three meetings in a row, meaning its key lending rate has a target range of 4.25% to 4.5%, reports the BBC.
The Bank of England sets interest rates and it’s important to homeowners because it acts as a benchmark for the cost of borrowing money. In theory the lower the base rate, the lower mortgage rates. And if the base rate rises, the mortgage rate prediction would be for mortgage interest rates to usually rise too.
The current UK Bank of England base rate is 4.50% in April 2025.
The average SVR in April 2025 is 7.99%. However, SVRs vary widely by lender. For example Newcastle Building Society’s SVR is currently 6.75% while Aldermore’s SVR is 9.03%.
The Bank of England increased UK interest rates as it tried to get surging inflation down to the government’s target of 2%.
Yes, UK interest rates are expected to go down further. Markets are currently pricing in 2 interest rates cuts this year with the base rate expected to fall to 4% by the end of 2025. However, whether this happens depends on a range of factors including what happens with inflation.
The higher your mortgage rate, the more expensive your monthly mortgage payments will be and the more expensive your mortgage will be overall.
The mortgage rate you’ll get access to is set by your lender and will be based on several factors including economic conditions, the Bank of England base rate, the size of your deposit (your loan to value ratio) your personal and financial circumstances (including your credit history) and type of mortgage you choose.
Yes. In April 2025, average mortgage rates are going down on 2 year and 5 year fixed rate mortgages.
HomeOwners Alliance Ltd is registered in England, company number 07861605. Information provided on HomeOwners Alliance is not intended as a recommendation or financial advice.
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