Today’s decision to reduce the base rate to 4% will be warmly received by both homebuyers and remortgagers. This move not only signals a renewed commitment to affordability but also strengthens the growing sense of optimism in the mortgage market.
Borrower activity has remained strong in recent months, buoyed by rate reductions, criteria improvements and increased lender confidence. With this rate cut, we expect to see even greater engagement, particularly among first-time buyers and those seeking to refinance. Product availability continues to be robust across all segments, and the outlook for low-deposit mortgages is more encouraging than ever. This reduction sets the stage for further momentum and opportunity in the housing market.
How do interest rates look?
Over the last 3 months we’ve seen average rates drop across all deposit thresholds. Fixed rates below 4% continue to be available across fixed rate options* and the average 2 year fixed rate is now the lowest it has been since September 2022**. Mortgage product options remain high, last month was the 2nd highest product count on record since October 2007**. For those who are coming up for a refinance or planning a move we can look to secure competitive options, compared to the last 2 years. Those on a standard variable rate who are looking to renegotiate onto a fixed-term mortgage product could save up to £11,611.20***..
How will today's announcement affect your current mortgage?
• If you’re on a fixed-rate mortgage, there's no change, but if you’re within the last few months of that deal, it’s worth looking at your options for remortgaging now. You can lock in a new rate in advance which will prevent you from reverting to your lender’s standard variable rate. Talk to us about your options.
• If you're on a tracker mortgage which effectively 'tracks' the base rate, and your lender reduces their base rate, you should see your interest rate come down and a change to your monthly repayment. This payment change isn’t always instant.
• If you're on a standard variable rate mortgage, the interest rate and your monthly repayment might come down.
How will it affect your options for buying a home?
For those of you with a smaller deposit who are considering buying your first home, the government recently announced the permanent Mortgage Guarantee Scheme, now known as "Freedom to buy initiative" which supports lenders offering 5% deposit mortgages, encouraging more options in this space.
For those upsizing, the improvements in lenders affordability criteria over recent months now means many borrowers can lend more than they could 6 months ago. Paired with improved interest rates may now mean this is the time to make that move.
Take a look at the best deals we currently have available:
If you’re buying for the first time: First Time Buyer Mortgage Deals
If you’re buying a brand new home: New Build Mortgage Deals
If you’re moving home: Home Moving Mortgage Deals
If you’re investing: Buy-to-let Mortgage Deals
With many mortgage products and options available, finding the right one could feel overwhelming. Your situation is unique, and we'll act as your personal guide through this. From identifying the most suitable options for your needs, to providing clarity and confidence in making one of life's biggest financial decisions, we’ll help you save time and money.
Book an appointment today to talk to one of our advisers.
* based on market leading rates 01/08/2025 sub 90% LTV for a 2 year fixed and sub 85% LTV for a 5 year fixed – 27tec data. Saving £16,965.36 over two years.
** according to Moneyfacts data.
*** based on mortgage loan of £350,000 and moving from Santander’s current SVR rate of 6.75% to a 2 year fixed at 3.80% over a 25 year term (below 60% LTV, subject to lenders conditions). Saving £11,611.20 over two years.
