Mortgage rates are always a hot topic—especially for potential homebuyers, remortgagers, and investors. As inflation, interest rates, and the economy shift, many people are asking: are mortgage rates going down soon? In this article, we look at current trends, what experts are saying, and what it could mean for you.
What’s the Current Situation?
- The Bank of England (BoE) cut the Bank Rate to 4.00% in August 2025. bankofengland.co.uk
- Inflation remains stubbornly high, above the target level, which limits how quickly rates can fall. House of Commons Library
- Many lenders have already started to ease fixed mortgage rates somewhat, especially for borrowers with good credit scores and sizable deposits. But these reductions are gradual, not sharp. mojomortgages.com
Why Mortgage Rates Might Not Fall Fast
Here are some of the main reasons why mortgage rates are not dropping rapidly:
- Inflation: If inflation doesn’t ease more, the central bank may hold off on aggressive cuts. House of Commons Library
- Economic Uncertainty: Concerns about global markets, supply chain disruptions, or energy costs can make lenders cautious.
- Bond Yields and Swap Rates: Mortgage rate offers are influenced by long-term government bond yields, swap rates etc. When those stay high, mortgage rates tend to stay elevated. HomeOwners Alliance
Why There Are Signs Rates May Gradually Decline
Despite the challenges, there are factors suggesting mortgage rates may trend downward over the coming months or years:
- The BoE has already made a few base rate cuts since August 2024. House of Commons Library
- Markets are pricing in expectations of further rate cuts, especially if inflation starts to consistently fall toward target. fidelity.co.uk
- Competition among lenders is pushing some fixed mortgage deals lower—especially for lower Loan-to-Value (LTV) mortgages and borrowers with good credit. mojomortgages.com
What This Means for Different Kinds of Borrowers
| Borrower Type | What Falling Rates Could Mean | What to Watch Out For |
|---|---|---|
| First-Time Buyers | More affordable fixed rates; possibly lower monthly payments. | Deals may not last long; best rates often require higher down payments or LTV restrictions. |
| Remortgagers | Opportunity to switch to a lower rate if current fixed deal ends. | Switching fees, early exit penalties; new deals sometimes come with fees. |
| Variable/Tracker Mortgage Holders | You may benefit sooner if base rate changes happen. | Variable rates also expose you to risk if rates rise again. |
| Investors / Buy-to-Let | Spread of rate reductions could improve yield/cost ratio. | Regulatory changes & tax policies can also affect profitability. |
Expert Outlook and Predictions
- Some experts expect gradual mortgage rate reductions through the second half of 2025, rather than steep drops. HomeOwners Alliance
- The Office for Budget Responsibility (OBR) forecasts mortgage rates (on average) could reach around 4.7% over the long term in some scenarios. Tembo Money
- However, if unexpected inflation shocks or global economic pressures arise, those could reverse positive trends. HomeOwners Alliance
What Should You Do Now?
Here are actionable tips depending on your situation:
- Compare mortgage deals now: Even small differences in rate or fees add up over time.
- Lock in a fixed rate if possible: If you find a good rate and you expect rates may climb or remain volatile, fixing might give you security.
- Keep your credit score strong: Better credit often unlocks better mortgage rates.
- Watch base rate announcements and BoE policy signals—they can affect lender behavior.
- Consult a mortgage advisor: They can help find good deals and anticipate when rates may shift.
Conclusion
So—are mortgage rates going down? Yes, but slowly and unevenly. The headline is that some rates are easing, especially fixed deals for borrowers with good credit, but headline drops won’t likely be dramatic in the short term if inflation stays sticky.
If you’re in the market now, it might make sense to act—compare deals, talk to a mortgage broker, and consider locking in a good fixed rate if you can. Being proactive could save you money, especially if rates stay higher for longer.