Vanishing act of sub-4% fixed rate mortgages
A cut to Bank of England Base Rate (BBR) looks increasingly unlikely, with the upheaval in mortgage re-pricing leading to a vanishing act of sub-4% fixed mortgages, according to Moneyfactscompare.co.uk analysis.
Mortgage market analysis
- The pool of lenders offering a sub-4% fixed rate deal has taken a significant blow. All of the biggest banks, namely Barclays, HSBC, Lloyds Bank, NatWest and Santander, have increased rates since the start of March.
- Prolonged market uncertainty can lead to further rate increases or product withdrawals. Barclays, HSBC, NatWest, Nationwide and Santander no longer offer sub-4% fixed deals, which were available last week. Across the market, the last time the lowest two- and five-year fixed rates were priced above 4% was over a year ago, in February 2025, based on first of month data.
- Year-on-year average mortgage rates across the two-, five- and 10-year fixed sector have fallen, but recent increases have pushed the average two- and five-year rates above 5%.
- The Bank of England Base Rate was cut to 3.75% in December 2025, since then, the average standard variable rate (SVR) has fallen by 0.14%, from 7.27% to 7.13%. Year-on-year, BBR has fallen by 0.75%, but the average SVR has fallen by just 0.55%.
- The Moneyfacts Average Mortgage Rate has fallen over the last 12 months, from 5.33%; last month the rate was 4.90%, but it has recently breached 5%.
Rachel Springall, Finance Expert at Moneyfactscompare.co.uk, said:
“Borrowers looking for the lowest fixed rates will be disappointed to see the demise of sub-4% mortgages, but they are not sustainable with swap rates increasing. Lenders look at margins very carefully, so it would be unwise to price their deals too low, if the expectations are for interest rates to rise, even if over the short-term. The mortgage market needs stability, and really, borrowing costs are lower than in recent years, and we have had sub-4% deals on the shelves for over a year (since February 2025). While many of the biggest lenders no longer offer a sub-4% fixed deal, it is a cautious decision. Mortgage rates are rising due to global pressures, not UK fiscal policy, so while not ideal, rate increases are not mirroring the ‘mini-Budget’ fiasco in 2022.
“In an unprecedented turn of events, the unrest in the Middle East has led to rising swap rates, which has inflated mortgage rates and caused deals to be pulled from sale, some temporarily. These developments have scuppered expectations for the Monetary Policy Committee to vote for a cut to the Bank of England Base Rate, now much more likely for a hold this week. If such uncertainty is prolonged, and indeed if inflation spikes, we could even see an increase to BBR before the year is over. It really is too early to tell what might happen, but borrowers searching for a new deal should seek advice if they are concerned about rising costs. It is still important to secure a fixed deal compared to a high revert rate, as almost £300 could be saved each month in repayments*, and existing borrowers could lock into a new deal six months in advance.”
*Average standard variable rate (SVR) is currently 7.13%. Calculations based on a £250,000 mortgage over a 25-year term on a repayment basis. SVR repayment £1,787 per month, versus £1,502 per month on 5.28% two-year fixed rate.
Vanishing act of sub-4% fixed rate mortgages
A cut to Bank of England Base Rate (BBR) looks increasingly unlikely, with the upheaval in mortgage re-pricing leading to a vanishing act of sub-4% fixed mortgages, according to Moneyfactscompare.co.uk analysis.
Mortgage market analysis
- The pool of lenders offering a sub-4% fixed rate deal has taken a significant blow. All of the biggest banks, namely Barclays, HSBC, Lloyds Bank, NatWest and Santander, have increased rates since the start of March.
- Prolonged market uncertainty can lead to further rate increases or product withdrawals. Barclays, HSBC, NatWest, Nationwide and Santander no longer offer sub-4% fixed deals, which were available last week. Across the market, the last time the lowest two- and five-year fixed rates were priced above 4% was over a year ago, in February 2025, based on first of month data.
- Year-on-year average mortgage rates across the two-, five- and 10-year fixed sector have fallen, but recent increases have pushed the average two- and five-year rates above 5%.
- The Bank of England Base Rate was cut to 3.75% in December 2025, since then, the average standard variable rate (SVR) has fallen by 0.14%, from 7.27% to 7.13%. Year-on-year, BBR has fallen by 0.75%, but the average SVR has fallen by just 0.55%.
- The Moneyfacts Average Mortgage Rate has fallen over the last 12 months, from 5.33%; last month the rate was 4.90%, but it has recently breached 5%.
Rachel Springall, Finance Expert at Moneyfactscompare.co.uk, said:
“Borrowers looking for the lowest fixed rates will be disappointed to see the demise of sub-4% mortgages, but they are not sustainable with swap rates increasing. Lenders look at margins very carefully, so it would be unwise to price their deals too low, if the expectations are for interest rates to rise, even if over the short-term. The mortgage market needs stability, and really, borrowing costs are lower than in recent years, and we have had sub-4% deals on the shelves for over a year (since February 2025). While many of the biggest lenders no longer offer a sub-4% fixed deal, it is a cautious decision. Mortgage rates are rising due to global pressures, not UK fiscal policy, so while not ideal, rate increases are not mirroring the ‘mini-Budget’ fiasco in 2022.
“In an unprecedented turn of events, the unrest in the Middle East has led to rising swap rates, which has inflated mortgage rates and caused deals to be pulled from sale, some temporarily. These developments have scuppered expectations for the Monetary Policy Committee to vote for a cut to the Bank of England Base Rate, now much more likely for a hold this week. If such uncertainty is prolonged, and indeed if inflation spikes, we could even see an increase to BBR before the year is over. It really is too early to tell what might happen, but borrowers searching for a new deal should seek advice if they are concerned about rising costs. It is still important to secure a fixed deal compared to a high revert rate, as almost £300 could be saved each month in repayments*, and existing borrowers could lock into a new deal six months in advance.”
*Average standard variable rate (SVR) is currently 7.13%. Calculations based on a £250,000 mortgage over a 25-year term on a repayment basis. SVR repayment £1,787 per month, versus £1,502 per month on 5.28% two-year fixed rate.
