It’s been a long and challenging couple of years for mortgage customers, but falling fixed mortgage rates mean at last there may be some light at the end of the tunnel.
Those looking to remortgage or move home can now lock into a five-year fixed rate mortgage deal below 4%.
Barclays, for example, is offering two and five-year fixed rates for homemovers at 3.99%, with a 60% loan-to-value (LTV) and a product fee of £899.
Alternatively, Coventry Building Society is offering a two-year fixed rate at 3.89% for homemovers looking to borrow up to 65% of the property value. This mortgage has a £999 arrangement fee and includes a free valuation.
If you’re looking to remortgage, Nationwide has introduced a five-year fixed rate at 3.99% for those wanting to borrow up to 60% of their property value, although you must borrow at least £300,000, and the deal comes with a hefty £1,499 arrangement fee.
Similarly, First Direct is offering a five-year deal charging 3.99%, if you’re remortgaging, with a maximum 60% loan-to-value. This deal has a £490 arrangement fee, but includes a free valuation as well as free legal fees.
This is encouraging news for anyone who has been waiting to move or remortgage, but has been put off by steep rates. However, bear in mind that you’ll usually need some considerable equity or a sizable deposit to qualify for the best deals.
The average two-year fixed rate now sits at 5.32%, while the average five-year rate is 5.18%. In March, average rates were higher, with two-year fixes at 5.39% and five-year fixes at 5.22%.
“The average two-year rate has been higher than its average five-year counterpart since October 2022, though the gap has been gradually narrowing since then,” said Rachel Springall, finance expert at Moneyfactscompare.co.uk.
“Fixed mortgage rates are down year-on-year, and slowly the market is seeing the average two-year fixed getting closer to its five-year counterparts, now with a rate gap of just 0.14%. At a 60% loan-to-value, where rates are generally lower compared to higher lending ratios, the difference between the average two- and five-year rate was only 0.10% as of 1 April.”
Want to speak to a mortgage advisor? Speaking to an experienced mortgage advisor can help you to understand your options and get a great deal on your mortgage.
If you’re looking for expert mortgage advice, you can get a free consultation with an independent mortgage adviser at Fidelius. Speak with a qualified, FCA-regulated, independent mortgage adviser you can trust. Rated 4.7/5 on VouchedFor from over 1,250 reviews.
What’s happening to UK mortgage rates?
Whilst current falling rates are positive for mortgage borrowers in isolation, the figures across the past few years tell a more complicated story. Early 2023 was a particularly uncertain time for homeowners in the wake of September 2022’s disastrous mini Budget. Some lenders introduced rates higher even than their standard variable rates (SVRs), which is usually the most expensive rate on the market.
Rates gradually declined in the following months as the government took steps to tackle inflation, but then suddenly ramped up in July 2023 and reached an even higher peak in August. One major contributing factor was that the Bank of England base rate was unexpectedly forecast to reach 5.75% by the end of the year, when experts had previously not expected it to breach 5%. The base rate was then held at 5.25% for fourteen consecutive months, before it was finally reduced to 5% in August 2024. It fell again in December last year and then again in February 2025 to its current level of 4.5%.
It’s important to remember, however, that rather than being pegged to the base rate, fixed mortgage rates are predominantly determined by what is happening to ‘swap’ rates. These are fixed rates that institutions charge each other to borrow money.
Swap rates are affected by various factors, including long-term market projections for the Bank of England base rate, as well as the broader economic outlook. Swap rates have declined recently following market turmoil which arose due to US tariffs, and this in turn has led to mortgage lenders cutting rates. You can learn more about swap rates and their impact on fixed-rate mortgages in our guide What are swap rates and how do they affect my mortgage?
The average Standard Variable Rate (SVR) – the interest rate your lender puts you on once your introductory deal ends – currently stands just below 8%, having peaked at 8.19% in December 2023. This means homeowners on their lender’s SVR face a difficult choice if they think fixed rates may have further to falle: ride out these hefty repayments in the hope that fixed-rate deals will continue to trickle down, or snap up a deal now and slash your repayments – but risk losing out on better deals down the line.
It’s worth noting that the average shelf life of a mortgage product rose from 16 days to 21 days in April, but it’s still a good idea to act fast if you’re on the fence about a particular deal. The good news is that most lenders will allow you to secure into your next mortgage three to six months before your current deal finishes. This means you can tie in a rate now, and then keep an eye on the market. If rates subsequently fall before your new deal begins, you’re free to move to a better rate, but if rates rise, you have peace of mind that you’ve already secured a competitive deal.
Want to speak to a mortgage advisor? Speaking to an experienced mortgage advisor can help you to understand your options and get a great deal on your mortgage.
If you’re looking for expert mortgage advice, you can get a free consultation with an independent mortgage adviser at Fidelius. Speak with a qualified, FCA-regulated, independent mortgage adviser you can trust. Rated 4.7/5 on VouchedFor from over 1,250 reviews.
Is now a good time to get a mortgage?
It’s hard to say whether fixed rates will fall further in coming months, simply because it’s impossible to predict whether the current trend will continue, or the mortgage market will suffer another unexpected blow that forces lenders to hike their rates – or if rates will simply stay around their current level and settle into a new normal.
Whatever lies ahead, it seems highly unlikely that average rates will reach the sub-3.00% levels seen prior to December 2021 anytime soon, so waiting around on your lender’s SVR for them to fall quite this low could end up being a costly move.
Fortunately, the number of mortgage deals available on the market has risen significantly in the past year, and stood at 6,870 at the beginning of April, up from 6,684 in March.
Those hoping to remortgage soon would also do well to remember that the lowest rate isn’t always the best deal once mortgage fees are factored into the equation, particularly if the loan capital is low or the term is relatively short. Read our article Why the lowest rate mortgage may not be the cheapest deal to learn more about how high fees can offset the benefit of a tempting low-rate deal.
If you are unsure about whether now is the time for you to seek out a mortgage, or which deal is right for you, then it could be wise to speak to an expert to make sense of the market and see what your best options are.
Want to speak to a mortgage advisor? Speaking to an experienced mortgage advisor can help you to understand your options and get a great deal on your mortgage.
If you’re looking for expert mortgage advice, you can get a free consultation with an independent mortgage adviser at Fidelius. Speak with a qualified, FCA-regulated, independent mortgage adviser you can trust. Rated 4.7/5 on VouchedFor from over 1,250 reviews.
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