As we approach the last quarter of 2025, many homeowners and buyers are keeping a close eye on the mortgage rate. With the Bank of England gradually reducing the base rate over the past year, mortgage holders are asking some questions. Will rates continue to fall? Is now the right time to lock in a new deal? What are the mortgage rate predictions for the remainder of the year?
This article explores the current state of mortgage rates, the broader economic context and mortgage rate forecasts to help you make informed decisions in the months ahead.
A Quick Look Back
Throughout 2024 and into early 2025, the Bank of England cut interest rates steadily in response to easing inflation and slowing economic growth. After peaking at 5.25% in mid-2023, the base rate has been trimmed five times, bringing it to 4% as of August 2025.
These cuts have already had an impact on current mortgage rates, especially for fixed-rate deals. In August, the mortgage rates for 2-year fixed deals at 60% LTV dropped to 3.90%, a welcome relief for many households.
Yet despite these developments, uncertainty still hangs in the air. The most recent rate cut in August saw a narrow vote, with 5 of 9 Monetary Policy Committee (MPC) members in favour. This highlights the cautious tone from policymakers and suggests a potentially slower pace of change in the coming months.
Current Mortgage Rates Present a Mixed Picture
Lenders have responded to base rate cuts by improving their offerings. While these rates are lower than what borrowers faced in 2023, they are still notably higher than the ultra-low rates available in the early 2020s. This means affordability remains a concern, especially for first-time buyers or those looking to remortgage after a low-rate fixed period ends.
Mortgage Rate Forecast for the Rest of 2025
Some analysts expect further cuts to the Bank of England base rate by the end of 2025, potentially lowering it to 3.75%. However, this is far from guaranteed. Sanjay Raja, chief UK economist at Deutsche Bank, suggested that market activity has reduced expectations for additional rate cuts in 2025. If inflation remains sticky or global economic conditions shift, the MPC may adopt a more cautious stance.
However, most mortgage rate predictions agree that rates could continue on a gradual downward trajectory. Still, there is no certainty around what will happen next and how long current mortgage deals might be available for.
Choosing the Right Mortgage in 2025
In light of this uncertainty, many borrowers are wondering how to secure the best mortgage rate for their circumstances. Fixed rates remain a popular choice, offering peace of mind in a volatile environment. Recent data from Santander shows that many are opting for 2-year fixed rate, indicating a shift from the traditional preference for 5-year fixed rates.
Alternatively, with more rate cuts potentially on the horizon, tracker mortgages, which follow the Bank of England base rate, may offer savings, over time.
You may want to opt for a 2-year fixed rate if you believe mortgage rates will fall or want to remortgage thereafter. If you prefer payment stability and are less concerned about small rate reductions, choosing a 5-year fixed rate may be more suitable.
You could consider a tracker mortgage if you are comfortable with variable payments and want to benefit from potential future base rate cuts. Whatever you choose, it is important to review your deal periodically. Many brokers offer rate-check services to ensure you are always on a competitive product.
Why Acting Early Matters
In the current environment, it may be tempting to wait and see whether mortgage rates fall further. However, this strategy carries risks. If your current deal ends within the next six months, by securing a new deal, you could consider locking into one of the mortgage rates available currently and switch to a better option later if the market improves after your rate fix period ends.
What This Means for First-Time Buyers
First-time buyers often face the steepest hurdles when it comes to securing a mortgage. With mortgage rates still relatively high compared to the 2020-2021 period, affordability is a key concern. If you are looking to buy soon, you could improve your position in the following ways:
- Save a larger deposit: The best mortgage rates are usually associated with higher deposits.
- Use a mortgage broker: They can help you find deals tailored to your situation and increases your chances of approval.
- Boost your credit score: A strong credit history makes you more attractive to lenders.
- Act swiftly: Suitable mortgage deals can disappear quickly in a shifting market.
The Bottom Line on Mortgage Rate Predictions
The trajectory of mortgage rates in 2025 is influenced by several factors, such as inflation, economic growth and global financial stability. While there is cautious optimism that the Bank of England will continue to reduce the base rate, there still appears to be some uncertainty ahead.
Here are some steps you could consider taking:
- Lock in a good deal if your mortgage term ends within six months.
- Keep an eye on current mortgage rates and lender updates.
- Consider both fixed and tracker options depending on your financial goals.
- Use comparison tools and speak to a broker to ensure you are accessing the best mortgage rates available.
Conclusion
As we move into the final quarter of 2025, rates do appear to be falling slowly. However, no one can predict what mortgage rates will do next and preparation is essential. By acting early and leveraging expert support, you can make the most of the current mortgage rate landscape and secure a deal that suits your financial goals.
FAQs
Q. Are mortgage rates going down in 2025?
A. Yes, mortgage rates have been falling gradually due to multiple base rate cuts. However, further reductions, which are not guaranteed, may be slower or more limited than perhaps originally expected.
Q. What are the current mortgage rates in the UK?
A. As of August 2025, average current mortgage rates include:
- 2-year fixed (60% LTV): 3.90%
- 5-year fixed (60% LTV): 4.02%
- Standard Variable Rate: 7.60%
Q. What is the mortgage rate forecast for late 2025?
A. Some mortgage rate forecasts suggest that rates will continue to decline slightly, but not drastically. A base rate of 3.75% could be expected by the end of the year, but this is not guaranteed.
Q. Should I fix my mortgage now or wait?
A. If your current deal ends soon, it may be advisable to fix now. There is no certainty that mortgage rates will fall any lower.
Q. How do I find the best mortgage rate for me?
A. Use mortgage comparison tools, consult a broker and start the process early. Each lender has different criteria, so personal advice can go a long way in securing the best mortgage rate for your situation.
Q. Can I lock in a better deal soon?
A. Some lenders allow you to lock in a deal up to six months in advance. Doing so lets you take advantage of current mortgage rates.
Additional Sources
https://hoa.org.uk/advice/guides-for-homeowners/for-owners/mortgage-rate-forecast/
https://www.rightmove.co.uk/news/articles/property-news/current-uk-mortgage-rates/
https://www.mortgageable.co.uk/mortgages/history-of-mortgage-interest-rates/
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