What’s Happening with UK Mortgage Rates in 2025? Here’s What You Need to Know
If you’ve been bracing yourself every time the postie brings another mortgage statement, you’re not alone. After the rockier rates of 2023, it’s fair to say many of us have spent the last year doing mental gymnastics about when (and if) things might ease. Well, as of June 2025, there’s at least a glimmer of good news on the home front – mortgage rates are slowly improving, and while we’re not quite back to the pre-pandemic glory days, movement is heading in the right direction.
Let’s dive into the latest UK mortgage rate forecast and what it could mean for your bank balance – and your future plans.
Where Are Mortgage Rates Now?
Right now, in mid-2025, five-year fixed rate mortgage deals are hovering around 3.99% at their best. Most fixed rates are still sitting just above 4.5%, which might still feel steep if you remember sub-2% deals from 2020. But compared to last year’s highs, this is a welcome drop – and could mean monthly savings of over £200 on a typical £200,000 mortgage compared to 2023 rates.
If you’ve been holding off on changing your deal, this could be the window you’ve been waiting for.
Are Mortgage Rates Going Down From Here?
In short: yes, but don’t break out the party poppers just yet.
Most market analysts expect the Bank of England’s base rate decision to come down slowly through the rest of 2025. Predictions suggest two cuts – one in August and another in November – which could bring the base rate down to around 3.75%. That’s in contrast to 2023 and early 2024, where we saw rates rise sharply due to stubborn inflation.
What does that mean for UK mortgage predictions this year? Essentially, the direction is positive, but it’ll likely be a slow and steady descent rather than a dramatic fall. Inflation is still doing its thing behind the scenes, so lenders are staying cautious.
Why Lender Competition Matters More Than Ever
Another glimmer of hope comes from the fact that lender competition is starting to heat up again. With fewer people buying and remortgaging during the cost-of-living squeeze, lenders are all trying to tempt borrowers back with better deals.
That’s why we’re starting to see those sub-4% fixed rate mortgage deals emerge. And while they’re not yet widespread, the growing competition could keep nudging rates down. It’s worth keeping a keen eye on the market – or setting up alerts if you’re browsing online tools.
If you’re also thinking about updating your space and want to be mindful about your finances, consider planning ahead by reviewing how to budget for a home renovation in 2025, especially as borrowing becomes more affordable.
Is Now the Best Time to Remortgage?
Ah, the million-pound (or £200,000) question. The best time to remortgage in the UK really depends on your circumstances. But 2025 is shaping up to be a solid opportunity – particularly if your current fixed rate is due to end soon.
Here’s why:
- Rates are improving but not yet at rock-bottom, so there’s a good chance of locking in a decent fixed rate before another economic wobble.
- If you remortgage now, you could dodge the risk of inflation ticking rates back up unexpectedly.
- Some brokers suggest that remortgaging before the predicted base rate drops could secure better deals, especially as demand starts picking up later in the year.
Top tip: speak to a mortgage broker or adviser as early as you can – some deals can be reserved months in advance, and they’ll help compare options that suit your situation best.
Need more guidance? Head over to our article on remortgage tips or get help from a mortgage broker for tailored advice.
Keep an Eye on the Bigger Picture
While mortgage rates can feel like the centre of the homeownership universe, they’re not the only factor in play. If you’re buying, selling or just price-watching from the sofa, the house price forecast is worth keeping tabs on, too. Property values often shift alongside borrowing costs, which could work in your favour depending on your plans.
If you’re wondering what your own property might fetch in the current climate, check out these easy ways to find out how much your house is worth in the UK. Understanding your home’s value could give you better leverage in remortgaging or future plans.
Add into that the impact of inflation on mortgages – including affordability checks, stress testing and product offers – and it’s clear there’s a lot going on beneath the surface.
Curious? You can find more on what’s happening with UK house prices here.
Final Thoughts from Ruth
As someone who’s been watching the mortgage market changes from my Humberside kitchen (with a cuppa firmly in hand, obviously), my best advice is: stay curious and stay prepared. Mortgage rates are softening, yes – but they’re still unpredictable. If your current deal is ending this year, don’t wait for perfect. Look at what will save you money now, especially with some of those competitive fixed rate mortgage deals starting to shine.
And remember, a quick check-in with a broker can make a big difference – they’ll do the market legwork so you don’t have to.
Here’s to keeping more pounds in your pocket (and less stress in your mornings).
– Ruth x
Bonus Tip
Even if your deal isn’t up for renewal just yet, it’s worth setting a calendar reminder 6-9 months ahead of your end date. That gives you time to shop around, get advice and avoid the dreaded standard variable rate pitfall.
