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 9 December 2025

A mortgage price war has broken out as banks and building societies look to meet their lending targets by the end of the year.

With the Autumn Budget uncertainty out of the way and hopes of interest rate cuts in the coming weeks and months, many homebuyers and borrowers could be set for an early Christmas present in the form of cheaper mortgage rates.

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Springall said the average mortgage rate dropping below 5% was a “notable milestone” but warned it “remains uncertain on how long this can be sustained”.

Which mortgage lenders are lowering rates?

A string of banks have lowered rates in recent weeks including Santander, HSBC, TSB and Nationwide.

Santander released a two-year fixed rate for home movers at 3.51% at up to 75% loan-to-value (LTV) on Tuesday 9 December.

Nationwide announced cuts of up to 0.19 percentage points across two, three and five-year fixed rates last month and currently offers the cheapest five-year fixed rate at 3.75% for 60% LTV.

First-time buyers can access 90% LTV deals at 3.97% from Danske Bank.

The best deals can disappear quickly though if there is lots of demand so borrowers should act fast if they are ready to buy or remortgage.

Looking to remortgage? We reveal how to get the best deal.

What is the forecast for mortgage rates?

The Monetary Policy Committee (MPC) narrowly voted 5-4 to hold UK interest rates at 4% at its 6 November meeting. The four dissenters wanted to reduce the Bank rate by 25 basis points to 3.75%.

Some economists expect interest rates to come down when the Bank of England (BoE) next meets in December.

For example, Robert Wood, chief UK economist at Pantheon Macroeconomics, comments: “Rate-setters will have two labour market and inflation releases by December.

“We are comfortable sticking to our call for a December rate cut.”

Lenders tend to price in mortgage cuts in anticipation of potential rate cuts, hence why rates are falling now.

In the longer term, while a small majority of economists polled by Reuters predict no reduction in base rate for the rest of 2025, a majority expect two rate cuts by the middle of 2026.

HSBC’s interest rate prediction is that the base rate will fall to 3% by the end of 2026.

Nicholas Mendes, mortgage technical manager at the broker John Charcol, added: “My base case is five-year fixes holding in a 3.75 to 4.25% range, and two-year fixes around 4.25 to 4.75%.”

Mark Harris, chief executive of mortgage broker SPF Private Clients, added: “Lenders continue to trim their mortgage rates, a trend we expect to see more of in coming weeks, but they are likely to edge down rather than fall significantly. With perhaps two or three further base rate cuts expected by the markets, it’s good news for borrowers planning a move or remortgage in early 2026. While the era of rock-bottom rates has passed, most have adjusted to paying more for their borrowing."

Should you fix your mortgage?

If the last three 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?

Mendes said: “If you value certainty and plan to stay put, a five-year fix just under 4% is a sensible hedge.

“You are locking near what looks like the cycle floor without trying to pick the absolute bottom.”

For those with more appetite for risk, you could lock in a two or three-year fixed or tracker deal with no early-repayment charge, but only if you have a cash buffer and “clear plan to switch quickly if pricing turns”, he said.

What about variable mortgage rates?

Just over one 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 4.66%.

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

Anyone holding out for interest rates to fall further could opt for a tracker mortgage.

David Hollingworth, of mortgage broker London & Country, said: “Anyone that is sitting on a standard variable rate because they are hoping for more drops in fixed deals should consider whether a tracker would be a better option.

“The SVR is likely to be substantially higher and even if fixed rates do reduce over time, each month on SVR could be costing a lot more.”

What about buy-to-let rates?

According to Moneyfacts on 4 December, the average two-year buy-to-let mortgage rate is 4.72%, while the average five-year BTL rate is 5.13%.

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, less generous mortgage interest tax relief and higher income tax charges on property introduced in the Autumn Budget.

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 1.7 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.