All of the UK’s major banks and building societies are now promoting fixed mortgage rates below 4%, although financial advisers caution that further reductions are far from guaranteed.
A mini price skirmish has erupted among lenders, but many of the most attractive rates come with high upfront fees and significant deposit requirements.
The Bank of England is widely expected to cut its base rate several times this year amid mounting global financial instability.
Yet, many mortgage providers have already priced in anticipated base rate cuts, meaning customers hoping for continued drops could be left disappointed.
“If the base rate falls, fixed rates might come down a bit more, but nothing is certain,” said Aaron Strutt from broker Trinity Financial.
Borrowers Face Difficult Timing Choices
Some mortgages, particularly tracker and variable rates, closely mirror the Bank of England’s base rate, which currently stands at 4.5% and could be lowered at the next decision on 8 May.
However, around 80% of mortgage holders are locked into fixed-rate deals, which keep the interest rate unchanged until the term (often two or five years) ends.
Roughly 800,000 homeowners with fixed-rate mortgages at 3% or lower will see their deals expire each year until 2027, according to forecasts.
At present, the average two-year fixed mortgage sits at 5.21%, while a five-year fix averages 5.12%, according to Moneyfacts.
Despite this, lenders have reintroduced some headline-grabbing sub-4% offers, briefly seen earlier this year, much sooner than analysts had anticipated.
Global market shifts, including fallout from US tariff changes, have strengthened expectations of more interest rate cuts, pushing down swap rates—the financial benchmark that influences mortgage pricing.
Currently, there’s little difference between two-year and five-year swap rates, which is influencing borrower decisions.
“Lots of clients are opting for two-year fixes hoping rates will improve, but many could actually benefit from locking into longer deals for stability,” said Mr Strutt.
Rachael Hunnisett, standing before iron railings and window panes, thinks borrowers are tiring of the gamble.
(Image source: Rachael Hunnisett)
Broker Rachael Hunnisett argues many homeowners now prefer the security of longer fixed terms, rather than risking rate spikes after two years.
“Plenty of families don’t want their household budgets thrown into chaos by higher payments after just a couple of years,” she explained.
Her firm, April Mortgages, specializes in 10- and 15-year fixes, offering peace of mind even though their rates are generally higher than shorter-term deals.
April Mortgages has also begun offering home loans at up to seven times a borrower’s income—a more generous multiple than most shorter-term products allow—opening doors for more first-time buyers.
Lenders are not only lowering rates but also loosening borrowing criteria, with Nationwide recently tweaking its remortgage offerings to stay competitive.
“Sub-4% deals are moving from being rare specials to part of the standard range,” said David Hollingworth of L&C Mortgages.
Still, he warned that volatile global markets could cause rates to shift sharply in either direction.
In response, many borrowers are securing deals months ahead of their current mortgage expirations to hedge against rising rates, but staying flexible enough to switch if better options appear.