What’s Happening with Mortgage Rates Right Now – And Where Are They Heading?
As we move through 2025, the UK mortgage market is undergoing significant changes, with interest rates fluctuating in response to economic shifts. If you’re looking to buy a home, remortgage, or simply keep an eye on the market, here’s what you need to know about current mortgage rates and where they’re likely to go next.
Current Mortgage Rate Trends
Lenders have been reducing rates in recent months, with some now offering deals below 4% for borrowers with large deposits. For example(as of 6th March 2025):
- TSB is currently offering a five-year fixed-rate mortgage at 3.99% for existing customers with a 40% deposit.
- Barclays has introduced a 3.96% mortgage rate for energy-efficient new-build homes.
Average mortgage rates (as of March 2025) show:
2-year fixed at 60% LTV: 4.26%
5-year fixed at 60% LTV: 4.17%
These figures represent a slight decrease from the previous month, meaning we’re seeing a more competitive mortgage market for borrowers.
Why Are Mortgage Rates Falling?
The Bank of England recently cut the base rate from 4.75% to 4.5% in an effort to stimulate economic growth. As a result, many major lenders – including Barclays, HSBC, and Nationwide – have reduced their mortgage rates, offering relief to homeowners and buyers.
However, there’s a potential catch: Inflation has risen to 3% (January 2025), which is above the Bank of England’s 2% target. If inflation remains high, the Bank may be forced to pause or slow further rate cuts, which could mean mortgage rates stop falling as quickly as they have been.
Where Are Mortgage Rates Heading?
Most experts predict that mortgage rates will continue to fall, though at a slower pace. Projections suggest that:
- By October 2025, five-year fixed rates could drop to around 3.71%.
- By December 2025, they may reach as low as 3.30%.
That said, the future remains uncertain. If inflation stays high or the economy shows signs of instability, lenders could withdraw their most competitive mortgage deals, leading to higher rates again.
What Should You Do Now?
If you’re considering a mortgage or remortgage, now could be a great time to lock in a competitive rate before lenders adjust their pricing. However, as always, the best move is to get expert mortgage advice tailored to your circumstances.
At The Residential Mortgage Hub, we keep a close eye on the market and can help you find the best mortgage deal for your needs. Whether you’re a first-time buyer, home mover, or looking to remortgage, we’re here to guide you through the process.
📞 Get in touch today to discuss your mortgage options.
Final Thoughts
The UK mortgage market is currently in a state of change, with lenders offering some of the lowest rates we’ve seen in recent years. However, with inflation on the rise and economic uncertainty still a factor, borrowers should act sooner rather than later to take advantage of favourable deals.
Would you like to discuss your mortgage options? Contact us at The Residential Mortgage Hub for expert advice.
