For many homebuyers, mortgage rates play a key role in affordability and decision-making. As we move through 2025, the UK mortgage market is showing positive signs, with rates expected to fall slightly, improving buyer confidence. Understanding the latest trends can help you make informed choices about securing the right mortgage for your situation. 

Mortgage rates are expected to fall but remain stable 

After the turbulence of recent years, mortgage rates are predicted to gradually decline in 2025, but they won’t return to the historic lows seen during the pandemic. Current forecasts suggest that five-year and two-year fixed rates could drop to around 4.0%, down from 4.83% and 5.08% at the end of 2024.* 

This is largely due to expectations of four Bank of England Base Rate cuts, making borrowing slightly more affordable for new buyers. However, external factors like inflation and global economic events could influence future rate movements. 

More options for buyers in a competitive market 

With 2025 expected to remain a buyers’ market, home-seekers may find better negotiating power when securing a mortgage and purchasing a home. A higher number of available properties and slightly longer selling times mean buyers have the opportunity to shop around for the right home without feeling rushed. 

However, with house prices predicted to rise by 4% this year,* those considering a purchase may want to act sooner rather than later to lock in a lower rate before the market shifts. 

Shorter mortgage terms are becoming more popular 

As interest rates stabilise, two-year fixed-rate mortgages are becoming an increasingly attractive option for buyers. These shorter-term deals offer greater flexibility, particularly for those who anticipate refinancing in a few years when rates may be even lower. 

For those who prefer long-term stability, five-year fixed mortgages remain a solid choice, especially for first-time buyers looking to secure a predictable repayment plan. 

Remortgaging is a big focus in 2025 

Many homeowners who secured low fixed rates in 2020 will see their deals come to an end this year, meaning they may face higher monthly repayments. On the other hand, those who locked in higher two-year fixed rates in 2022 or 2023 may see their payments decrease as they switch to a lower rate. 

With lenders competing for business, remortgaging will be a major theme in 2025, offering opportunities for homeowners to explore better deals and save money on their monthly payments. 

Find the best mortgage deal for your home today