Forecasters predict the Bank of England will implement further interest rate cuts in 2025. This suggests UK mortgage rates will also gradually decline throughout the year, which could result in lower borrowing for homeowners, writes Karen Basnett of Newhomes
However, it’s essential to approach this prediction cautiously, as recent market uncertainties and rising inflation could slow down future rate movements.
Borrowers should consider their options carefully when securing a mortgage rate now or waiting for potentially lower rates.
While we anticipate lower rates, the Bank of England is expected to remain cautious throughout 2025, meaning mortgage rates will continue to fluctuate
Key factors influencing mortgage rates
Several key factors will influence mortgage rates in 2025. These include:
Inflation levels: Persistent high inflation may lead the Bank of England to postpone further base rate reductions.
Economic growth: A weak economic recovery or downturn might prompt the Bank of England to cut interest rates, potentially causing mortgage rates to fall.
Global Events: External factors such as geopolitical tensions or financial instability can impact the UK economy and mortgage rates.
Monitoring these factors will help borrowers decide the best time to secure a mortgage.
Advice: If you’re taking out a new mortgage
Predictions suggest that rates could fall between 3.5% and 4%, offering potential savings for new borrowers. With fluctuating mortgage rates, it is essential to time your application carefully.
Using an experienced mortgage broker like Newhomes will help you navigate fluctuations and secure the most suitable deal.
Should I wait for mortgage rates to decrease before getting a new mortgage?
Markets expect another two or three interest rate cuts from the Bank of England this year. Yet, choosing to wait for mortgage rates to drop carries risks.
Rates may not decrease as anticipated, and despite predictions, they could rise due to unforeseen economic shifts.
Homeowners: Act quickly to secure competitive mortgage rates
If you are a homeowner looking to secure a competitive rate, now could be a good time to explore your options. The shelf life of a mortgage product has significantly decreased to 16 days in March 2025, down from 36 days in February.
Consequently, mortgage products are being withdrawn swiftly from the market. If you encounter an attractive mortgage rate, it is essential to act promptly to avoid missing out.
The good news is that with Newhomes, you can secure a mortgage rate up to six months before your current deal expires. If a better deal arises, you can switch to the lower rate before finalising your mortgage.*
Should I remortgage now or wait?
If your current mortgage deal is ending, waiting for lower rates could mean moving onto your lender’s Standard Variable Rate (SVR). These rates are higher and lead to increased monthly payments. The average SVR as of 1 April 2025 is 7.60%, according to the latest data from Moneyfacts.
If your mortgage deal ends within the next six months, especially within the next four months, Newhomes advises beginning the remortgage process. Locking in a rate ensures you have a deal in place while keeping your options open; if rates fall before your fix ends, you can switch to the lower rate.
Newhomes provides a free Mortgage Rate-Check Service, ensuring you always get the lowest possible mortgage rate.*
Rate is not everything: Think total cost
It’s crucial to look beyond the mortgage rate. Some deals feature substantial fees that can outweigh the benefits of a lower interest rate. Always compare the total cost of a mortgage, including all fees, to make an informed decision.
The benefits of using a mortgage broker
The mortgage market can be overwhelming, especially with rate fluctuations and additional fees. Newhomes will:
- Provide fee-free expert advice that fits within budget.
- Compare mortgage products from over 75 lenders to secure competitive rates.
- Obtain exclusive mortgage broker-only deals.
- Offer expert advice on the total cost of the mortgage.
- Determine whether fixing now is the best option.
The UK’s mortgage experts
Newhomes has been providing transparent, fee-free mortgage advice for over 29 years. Our happy customers are always at the heart of what we do. We support clients every step of the way, from application to completion.
We believe in getting to know our clients personally, allowing us to find the perfect mortgage products to match their circumstances. Whether it’s a first-time buyer, home mover, remortgager, landlord, or a client seeking protection advice, our team of 39 specialist advisors can always help.
* Switching lenders may incur additional cost
Karen Basnett is a partner at Newhomes
