For the first time since September 2022, average two-year fixed mortgage rates in the UK have fallen below 5%. The current average is now 4.99%, which is the lowest it has been since September 2022, when it stood at 4.87%.
This is a small but important change that could make buying or remortgaging a home a little more affordable.
Why are rates falling?
This drop follows the Bank of England’s decision to lower its base interest rate from 4.25% to 4%, which is the fifth cut since August 2024.
The decision was made by the Bank’s Monetary Policy Committee (MPC), who voted in the majority to reduce the base rate. The base rate is the rate the Bank of England charges other banks when they borrow money, which in turn can make mortgages, loans, and other types of credit more affordable for consumers.
- When the base rate falls, borrowing (like mortgages and loans) becomes cheaper, but savers earn less interest.
- When the base rate rises, borrowing becomes more expensive, but savers earn more interest.
The base rate was 4.7% in January 2025. The Bank of England has cut the rate because the cost of living is rising slowly (inflation is easing), and they hope to encourage more spending and investment.
How does this affect different types of buyers?
Below, we’ve put together a table of how the impact of the mortgage rate drop will likely impact each type of buyer:
| Type of Buyer | Likely Impact of Rate Drop |
| Tracker or Standard Variable Rate (SVR) | Your payments will likely go down straight away, as your rate follows the base rate. |
| Two-Year Fixed Rate | New deals are now below 5%, so you may get a cheaper mortgage if you’re buying soon or your fixed deal is ending. |
| Five-Year Fixed Rate | Still slightly higher than two-year deals, but offers longer stability. |
| First-Time Buyers | Monthly costs may be a little lower, but high house prices still make saving for a deposit challenging. |
According to Sky News, someone on a variable mortgage of around £140,000 could save about £30 a month following this change. It’s not a huge drop, but over a year, that’s around £360 in savings, and that’s before considering any further cuts that may come.
Things to keep in mind
- House prices remain high; the average UK home costs around £298,237 (Halifax, July 2025).
- The MPC now thinks inflation will peak at 4% in September before falling back after that, returning to the 2% target by 2027 (Katie Williams, MoneyWeek).
- This means mortgage rates may not fall dramatically in the long term, so it’s wise to review your options now.
Our advice at Clapham & Collinge
If you’re thinking about buying a property or your current mortgage deal is coming to an end, now is a good time to take stock of your options. Here are a few practical steps we recommend:
- Check your mortgage type – If you’re on a tracker mortgage or your lender’s Standard Variable Rate (SVR), you might see a reduction in your monthly payments fairly quickly. It’s worth speaking to your lender or mortgage adviser to confirm what the change could mean for you.
- Review your fixed-term options – If your fixed-rate deal is due to end in the next few months, start looking at what’s available now. With rates dipping below 5%, you may be able to secure a new deal that offers long-term savings.
- Act promptly – While the current trend is promising, interest rates can change quickly. If you find a competitive rate, it’s often better to lock it in sooner rather than later to avoid missing out.
- Seek legal advice early – Having a conveyancer involved from the outset can make a big difference. We can help you progress your purchase or remortgage efficiently, ensuring your mortgage offer is secured before any further changes in the market.
At Clapham & Collinge, we work closely with clients across Norfolk to make sure the legal side of buying or remortgaging is handled smoothly and with your best interests at heart.
Thinking about buying or remortgaging?
The recent dip in two-year mortgage rates below 5% marks a meaningful opportunity for homebuyers and remortgagers. While economic uncertainties remain, the current environment offers a chance to lower your mortgage rate for those who are responsive and well-advised.
Our conveyancing teams in Norwich, Sheringham, and North Walsham are here to guide you through the process, explain your options, and make sure there are no unexpected costs or delays.
Norwich
Tel: 01603 693500
Sheringham
Tel: 01263 823398
North Walsham
Tel: 01692 660230