If you’ve been keeping an eye on mortgage rates, you’ll know one thing for sure—predictions are often wrong. Markets move in unexpected ways, and while everyone loves to make forecasts, the reality is that mortgage rates are driven by a mix of economic factors that nobody can fully control.
That said, we can take a realistic look at where things stand in 2025 and—more importantly—what you can do to make sure you’re getting the best possible deal.
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Where Are Mortgage Rates Right Now?
At the moment, two- and five-year fixed rates for borrowers with a solid deposit are sitting in the early to mid-4% range, with some creeping just under 4% if you’re happy to pay a fee. These headline rates are what you’ll see in the best-case scenarios, but the rate you actually get depends on a few key factors:
• Your deposit – If you have only 5-10%, expect to pay higher rates than someone with 25-40% equity.
• Your credit history – If you have bad credit, missed payments, or defaults, you may need a specialist lender, where rates can be significantly higher.
• The lender you use – Some lenders are far more competitive than others. High-street banks may have good deals, but brokers often have access to exclusive rates that aren’t available directly.
A couple of years ago, rates were peaking around 6%, so today’s rates are a definite improvement. But compared to the ultra-low 1-2% rates we saw pre-2022, they still feel high. It’s all about perspective.
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What’s Influencing Mortgage Rates in 2025?
Mortgage rates don’t just move randomly. They’re affected by a mix of domestic and global factors, including:
1. Inflation – The Big Driver
The main reason rates skyrocketed in recent years was inflation. When inflation is high, the Bank of England raises interest rates to slow it down. The good news? Inflation has been falling, which has allowed the Bank to pause rate hikes and start considering cuts.
That’s why mortgage rates have already come down from their peaks. If inflation continues to fall, we could see further reductions, but if it stays stubbornly high, lenders may hold off on lowering rates too much.
2. The US Factor – Why America Matters
It might seem odd, but what happens in the US has a huge impact on UK mortgage rates. The Federal Reserve (the US central bank) sets interest rates that affect global financial markets.
If they keep rates high, it makes borrowing more expensive everywhere, including in the UK. If they cut aggressively, it could help push UK rates lower.
3. Will the Bank of England Cut Rates?
The Bank of England’s base rate has been sitting at a high level compared to recent history. Most analysts expect one or two cuts this year, but the timing depends on inflation.
• If inflation keeps falling, rate cuts could happen sooner.
• If inflation stays high, the Bank might delay cuts, meaning mortgage rates remain in the 4%+ range for longer.
Either way, lenders tend to price in expectations early, which is why mortgage rates have already dropped from their peak.
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Should You Fix or Go for a Tracker?
One of the biggest decisions for borrowers in 2025 is whether to go for a fixed-rate or a tracker mortgage. There’s no right or wrong answer—it depends on your attitude to risk and your future plans.
Fixed-Rate Mortgages – Stability but No Flexibility
• A fixed-rate mortgage locks in your interest rate for a set period (usually 2, 5, or 10 years).
• Right now, 2- and 5-year fixed rates are very similar, so the choice comes down to personal preference.
• If you want certainty over your payments, a fixed rate is a safer bet.
Tracker Mortgages – More Risk but Potential Savings
• A tracker mortgage follows the Bank of England base rate plus a set percentage.
• If the base rate falls, your mortgage rate falls too. But if it rises, so do your payments.
• A tracker could be worth considering if you think rates will fall and are comfortable with some risk.
How Long Should You Fix for?
• 2-year fix – Good if you want flexibility, think rates might drop further, or might move house soon.
• 5-year fix – Good if you want long-term stability and don’t want to worry about remortgaging soon.
There’s no massive difference in pricing between 2- and 5-year fixes at the moment, so it comes down to your personal circumstances. If you think you might need to move or change your mortgage soon, a shorter fix or tracker could be a better option.
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How to Get the Best Mortgage Rate in 2025
While you can’t control the economy, you can take steps to improve the rate you’re offered. Here’s how:
1. Work With a Mortgage Broker
Lenders change their rates all the time, and the best deals aren’t always advertised. A broker like Strive Mortgages or The Mortgage Pod can help you find the most competitive lender for your situation—especially if you have a small deposit or credit issues.
A good broker will also help you switch deals if a better rate becomes available before completion.
2. Increase Your Deposit in 5% Thresholds
Lenders price their mortgages in loan-to-value (LTV) bands, and a small increase in your deposit can make a big difference to your rate.
For example, if you’re borrowing 91% of the property’s value, increasing your deposit slightly to get to 90% LTV could unlock lower rates. The key thresholds are:
• 95% LTV (5% deposit)
• 90% LTV (10% deposit)
• 85% LTV (15% deposit)
• 80% LTV (20% deposit)
Even shifting from 91% to 90% LTV can save you thousands over the life of your mortgage.
3. Keep Your Credit Score in Check
Lenders offer their best rates to borrowers with strong credit profiles. Before applying:
• Check your credit report with Experian, Equifax, or TransUnion.
• Register on the electoral roll.
• Pay off debt and avoid new credit applications before applying.
4. Review Your Rate Before Completion
If you’ve already applied for a mortgage but rates improve before completion, you can often switch to a better deal—but only if you ask. Check with your broker before completion to make sure you’re on the best available rate.
5. Start Your Remortgage Process Early
If your fixed-rate mortgage is ending soon, start the remortgage process up to six months in advance. This allows you to:
• Reserve a rate now
• Switch to a better deal if rates drop further before your new mortgage starts
This strategy helps you avoid being stuck on your lender’s expensive standard variable rate (SVR) while keeping your options open.
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Final Thoughts – Predictions Are Overrated, But Preparation Isn’t
If there’s one thing we know, it’s that nobody can predict mortgage rates with certainty. The best approach? Be prepared.
By improving your credit score, increasing your deposit, and working with a good broker, you can make sure you’re getting the best deal available—no matter what the market does next.