Mortgage market analysis

• The Bank of England Base Rate was cut to 4% in August 2025, but the 0.25% cut has not been mirrored by average mortgage rates. The average standard variable rate (SVR) has fallen by 0.15%, from 7.42% to 7.27% since the start of August 2025. Since the start of 2025 up to the start of this month, 0.75% has been shaved off BBR, but only 0.54% has dropped off the average SVR.
• Since the start of August 2025 (just a few days before BBR was cut to 4.00%), the average two-year fixed mortgage rate has fallen by 0.15%, from 5.01% to 4.86%, and the average five-year fixed rate has dropped by 0.10%, from 5.01% to 4.91%. Over the same period, the average 10-year fixed rate has risen by 0.01%, from 5.60% to 5.61%.
• Year-on-year average mortgage rates across the two-, five and 10-year fixed terms are down from 5.52%, 5.28% and 5.69% respectively.
• The Moneyfacts Average Mortgage Rate has dropped from 5.04% in August 2025 to 4.91%. The rate has fallen from 5.44% since December 2024, and lower than 5.88% in December 2023. In December 2022 the rate was 5.77%. The rate has been below 5% since the start of November 2025.

Rachel Springall, Finance Expert at Moneyfactscompare.co.uk, said:

“Mortgage rates have continued to fall over the past few months since the last Bank of England Base Rate (BBR) cut in August 2025, but only 0.15% has been shaved off the average standard variable rate (SVR), and fixed rates have fallen even less. Fixed mortgage rates are more intrinsically linked to swap rate movements, so borrowers shouldn’t wait around for a BBR cut to refinance. The incentive to switch from a revert rate to a two-year fixed deal could save borrowers £369 per month** on their mortgage repayments, which is almost £4,500 over 12 months.

“Existing borrowers with a fixed rate deal do not get any immediate benefit from base rate cuts, so for them, it’s worth concentrating on making overpayments to increase their equity for when they do come to refinance. This is particularly true for first-time buyers, as they are more likely to have very little equity in their home, plus may be more inclined to take out a longer term. A regular overpayment of £200 per month on a £250,000 mortgage can shave almost 13 years off a 40-year term, and save more than £118,000, based on the Moneyfacts Average Mortgage Rate of 4.91%.

“Moving into the New Year, there is an expectation for steady growth of those remortgaging and making product transfers and, according to UK Finance, 1.8 million fixed mortgages are due to expire in 2026. Those borrowers who want to stay with the same lender could secure a new deal four months before their current initial rate ends, a window which has been shortened from six months by a handful of lenders since last year. However, those who locked into a cheap fixed deal five years ago will need to accept that they will have to cover higher repayments, with the Bank of England expecting 3.9 million households will refinance onto higher rates over the next three years. Borrowers would be wise to seek advice to assess the overall cost of any deal to ensure it’s the right choice for them.”

**Average standard variable rate (SVR) is currently 7.27%. Calculations based on a £250,000 mortgage over a 25-year term on a repayment basis. SVR repayment £1,810 per month, versus £1,441 per month on 4.86% two-year fixed rate.

*Survey of 2,000 nationally representative UK adults carried out by OnePoll on behalf of Moneyfacts between 1 - 3 September 2025. Savings index data and analysis can be found here.