Will mortgage rates fall in 2025?

Multi-coloured vibrant row of terraced houses in Notting Hill, London as mortgage rates remain high

What will the rest of 2025 hold for UK mortgage rates?

(Image credit: Alexander Spatari)

last updated 13 October 2025

Homebuyers have been dealt a blow after average mortgage rates rose for the first time in eight months as of the start of October but deals are at least hanging around for longer.

Average mortgage rates on the overall two and five-year fixes rose at the start of October by 0.02 percentage points, to 4.98% and 5.02% respectively, according to money comparison website Moneyfacts.

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“There may be little margin of rate movement from lenders in the coming weeks, prolonging the subdued sentiment. Inflation is expected to peak at 4%, which would then be double the desired 2% target, so any imminent base rate cuts by the Bank of England seem unlikely. However, even with the three base rate cuts since the start of 2025, fixed mortgage rates can move up regardless, such as in reaction to volatile swap rates.”

Hina Bhudia, partner at Knight Frank Finance, explains: “The increases may only be a few tenths of a percentage point, but for borrowers that translates into a meaningful rise in monthly payments and will weigh further on sentiment already under strain from reports of likely changes to property taxation.”

Springall highlights that borrowers who locked into a two-year fixed rate deal back in October 2023 would have been paying 6.47% in interest on average compared with 4.98% now. That is a difference of £225 per month in repayments on a £250,000 mortgage over 25 years.

Which mortgage lenders are raising rates?

Many lenders including HSBC, Nationwide, Santander, Virgin and NatWest have recently raised their mortgage rates.

HSBC made a series of rate hikes on its two and five-year fixed rates for first-time buyers, home buyers, those borrowing more and remortgage rates. They also covered the bank’s green mortgages.

Bhudia comments: “We saw a handful of lenders edge fixed rates up after the Bank of England’s split decision and the stronger-than-expected wage growth that followed.”

Nottingham Building Society, Coventry Building Society, Royal Bank of Scotland, NatWest Intermediaries Solutions, Gen H, Vernon Building Society and Hodge have also increased some of their rates.

However, there have been a few rate cuts in recent weeks. While HSBC may have hiked rates earlier in September, it has now made a raft of further changes, which include raising some mortgage rates and reducing others.

Virgin Money lowered the price of some of its mortgage deals on 22 September, and Nationwide trimmed some of its rates on 18 September.

Nationwide’s cheapest rate is now 3.8% (reduced by 0.07%) – which is a two-year fixed rate at 60% loan to value with a £1,499 fee.

The lowest rate on the market is currently 3.64% for a two-year fix with Danske Bank.

What is the forecast for mortgage rates?

In terms of interest rate expectations, a Reuters poll conducted between 8-11 September showed 30% of economists (22 out 67) expect the base rate to remain unchanged for the rest of the year, up from 15% in August.

The Bank made it clear in August that it won’t rush to lower rates and the base rate was held in September.

While August’s cut from 4.25% to 4% was widely predicted, the Bank of England’s Monetary Policy Committee (MPC) voted 5-4 in favour of it with four members voting to hold rates unchanged, while one called for a 50-basis point cut.

Having almost half of the committee wanting to keep rates at 4.25% caught the market by surprise.

George Lagarias, chief economist at the advisory firm Forvis Mazars, comments: “While the rate cut was fully priced in by financial markets, the number of hawks on the MPC (four) is somewhat of a surprise.

“What will the move mean for consumers going forward? That there’s enough resistance in the Bank of England towards sharper cuts, for rates, and thus mortgages, to remain elevated for some time."

The Bank’s Monetary Policy Committee will meet two more times this year to set the base rate, in November and December.

Any cuts – or expected cuts – are usually favourable for mortgage rates. However, there are plenty of things that could derail interest rate predictions, and/or how mortgage lenders price their deals.

Nicholas Mendes, mortgage technical manager at the broker John Charcol, points out that mortgage rates may follow the path of interest rate cuts, “but not always in a straight line”.

He explains: “Fixed-rate pricing is driven by swap rates, and those move based on where markets think the Bank rate is headed, how inflation is trending, and what’s happening globally. A surprise data print, tariff announcement or geopolitical flare-up could all change the outlook overnight.”

Should you fix your mortgage?

If the last two years of rises and falls have told us anything, it's that predicting falls in mortgage rates is not an exact science. So, if you have one of the estimated 1.6 million fixed mortgage rates that is expiring this year, should you opt for another fixed deal?

David Hollingworth, associate director at the broker L&C Mortgages, says homeowners should start reviewing rates several months before their fix finishes. Locking in a rate now will offer protection against any future increases, and if rates fall before your current fix ends, you can switch onto the lower rate.

However, do double check the time window for locking in a new deal, as some lenders have reduced theirs to just three or four months.

Fixing your mortgage will provide peace of mind. However, if you're happy to take a gamble, and believe that interest rates will fall over the duration of your next mortgage deal, you could consider a base rate tracker.

Mendes comments: “The key concern for many borrowers is affordability. Those who locked in rates at 1-2% several years ago are now facing remortgage offers of around 4-5%, which could add hundreds of pounds to their monthly repayments.

“Some may choose to fix their rate now for certainty, while others may opt for a variable or tracker mortgage in the hope that rates fall. There’s also the option of shorter 18-month to two-year fixed deals, allowing borrowers to reassess their options once rates have declined further.”

With two-year rates slightly cheaper than five-year deals on average, the incentive now, for many borrowers, will be to sign up for a shorter-term mortgage.

First-time buyers and those remortgaging will need to weigh up whether to go for a short-term rate, which is a bit cheaper, or lock in for the long term and shield themselves against any future rate increases.

Katie Brain, banking expert at Defaqto, comments: “Those that want the financial stability of knowing their mortgage payment is fixed for a prolonged length of time may consider five-year products or even longer.”

What about variable mortgage rates?

About 1.1 million homeowners are on variable-rate mortgages, which are linked to the Bank of England’s base rate, according to UK Finance. This includes tracker deals and standard variable rates (SVRs).

The average SVR is an eye-watering 7.27%, according to Moneyfacts. The average two-year tracker costs 4.67%.

Those on a high SVR would be wise to switch onto a fixed rate now. Even if fixed rates fall this year, the money saved from getting rid of an expensive SVR earlier could make it worth it.

Rachel Springall, finance expert at Moneyfacts, says: “It’s essential for borrowers not to delay finding a new deal, particularly if they are sitting on an expensive SVR.

“However, with the lowest rate mortgages grabbing the headlines, it’s vital borrowers seek advice to find the most appropriate package for them, and not just be swayed by the initial rate.”

What about buy-to-let rates?

According to Moneyfacts, the average two-year buy-to-let mortgage rate on 30 September was 4.85%, while the average five-year buy-to-let fix was 5.21%.

These rates seem quite competitive compared to how high they have been over the past few years. Buy-to-let mortgage rates were pushing 7% in the summer of 2023.

Landlords will be hoping for a further fall in mortgage rates this year, to help offset the 5% stamp duty surcharge and less generous mortgage interest tax relief.

There is also speculation that the Treasury is considering targeting landlords in the Autumn Budget by applying National Insurance to rental income.

What mortgage support is available?

Mortgage rates are much higher than when many people would have last remortgaged. Millions of homeowners will be coming off rates as low as 1% or 2%.

If you’re struggling to make your mortgage repayments, the good news is that lenders representing 90% of the mortgage market have signed up to the government’s mortgage charter. They include the big banks like Halifax, HSBC and Santander and building societies like Nationwide, Leeds and Skipton.

The charter is a series of support measures intended to help those in difficulty. Borrowers will be able to make a temporary change to their mortgage for six months to give them some breathing space, such as switching to interest-only payments or extending their mortgage term to reduce their monthly payments. Customers have the option to revert to their original term within six months by contacting their lender.

About 1.4 million mortgages have benefitted from the mortgage charter since it was introduced in June 2023, according to the City watchdog.

Meanwhile, there is a 12-month delay before repossession proceedings can start against those who have missed payments. Regardless of whether your lender has signed up to the charter, all lenders also have a range of measures in place for customers experiencing difficulties.

Should I overpay my mortgage?

If you’ve got some spare cash and you're on a low rate, overpaying your mortgage can be a good way to protect yourself before your mortgage deal expires and you have to remortgage at a higher rate.

Our mortgage overpayment calculator shows how your monthly repayments will change and help you decide if it is worth it.

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Ruth is an award-winning financial journalist with more than 15 years' experience of working on national newspapers, websites and specialist magazines.

She is passionate about helping people feel more confident about their finances. She was previously editor of Times Money Mentor, and prior to that was deputy Money editor at The Sunday Times.

A multi-award winning journalist, Ruth started her career on a pensions magazine at the FT Group, and has also worked at Money Observer and Money Advice Service.

Outside of work, she is a mum to two young children, while also serving as a magistrate and an NHS volunteer.