25 Jul 2025
When will Mortgage Rates Fall Further?
Analysts are predicting further rate cuts this year, with the next one possibly coming down to 4% when the Bank of England’s Monetary Policy Committee meet on 7th August 2025.
The chief executive of Lloyds Banking Group has said he is expecting two further interest rate cuts to take place by the end of the year, bringing the base rate to 3.75%.
So far in 2025, we have seen two rate cuts, one in February (4.5%), and the other in May (4.25%), but the rate remained the same at the last meeting in June (4.25%).
What does a reduction in rates mean for mortgages?
Interest rate cuts generally mean borrowing becomes cheaper and mortgage payements could reduce.
The average fixed-rate mortgage currently (July 2025):
| July 2025 | |
| Term | Interest Rate |
| Two-year fixed | 4.52% |
Source: Rightmove
The average fixed-rate deal is hugely cheaper than in 2023, as seen below:
| July 2023 | |
| Term | Interest Rate |
| Two-year fixed | 6.39% |
Source: HomeOwners Alliance
However, those who secured rates pre-2021 will notice a jump when their deals come to an end:
| July 2020 | |
| Term | Interest Rate |
| Five-year fixed | 2.25% |
Source: HomeOwners Alliance
Many borrowers who are on fixed-rate deals are protected from any immediate changes, both good and bad. Those with a tracker on a standard variable rate (SVR) will notice an immediate change to their rate.
First-time buyer boost
A reduced rate is good news for those buying their first property, not only will a lower rate encourage first-time buyers onto the property ladder, they are also getting an extra boost thanks to the Chancellor’s Mortgage Reforms. This will allow first-time buyer, with less income to borrow more, offer support for lower-income buyers, will take into consideration rental payments to strengthen their case for affordability.
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