Wondering why now is the time to remortgage, at least according to some financial experts?
With current UK interest rates being held at 4.75% and future uncertainty, you’ll find some observers are suggesting now may be a good time to secure a deal.
However, it’s no secret that the base rate is always changing.
These changes can have a significant knock-on effect on interest rates – something every existing or prospective homeowner should be aware of if they’re considering making a move!
Luckily, the expert mortgage advisors at UKMC can help you to understand the impact that changing interest rates can have on the property market.
Regardless of whether you’re considering buying your first property, remortgaging, or moving to a new home, we can help.
To support you with making a more informed decision, our friendly and down-to-earth team explain the current interest rate in the UK as well as the predicted mortgage rates for 2025.
What is the current rate in the UK?
Before we explore the current mortgage rates in the UK and how that affects first-time buyers and those looking to remortgage, let’s take a look at how this rate is determined.
In short, mortgage interest rates are largely determined by the base rate, which is considered to be “the single most important interest rate in the UK,” according to The Bank of England (BoE).
This rate is influenced by different economic factors including the inflation rate, central bank policy, and market demand and is set by the BoE every six weeks.
During these meetings, the rate can either be increased, decreased, or determined to stay at the same level.
This rate refers to the amount of interest that the BoE pays to high street banks that hold money with them.
Subsequently, this impacts on the lending and savings rates of these high streets banks, which they pass onto borrowers or saving account holders.
Mortgage product lenders therefore regularly adjust the interest rates on their deals based on this rate.
In fact, according to the BBC, roughly 600,000 homeowners have a mortgage arrangement that “tracks” the Bank of England’s rate, so it’s important to keep an eye on this figure.
So, is now the right time to remortgage or purchase your first property? As reported by Moneyweek, The Bank of England has kept interest rates on hold at 4.75%, as of December 19, 2024.
According to figures provided by Podium and reported by Rightmove, the current average rates for 2-year and 5-year fixed-rate mortgages are set out below:
- For a 2-year fixed – average rate of 5.07%
- For a 5-year fixed – average rate of 4.81%
(NB. These rates are based on products with a circa £999 fee and are an average based on 95% of the mortgage market).
What is predicted to happen to mortgage rates in 2025?
Over the past decade, mortgage rates have typically been lower than the current rate in the UK.
Consequently, this has led to many prospective and existing homeowners feeling confused as to whether rates are going to continue to rise or drop again.
As per the official figures from the BoE database, this current 4.75% rate is the lowest base rate the UK has seen since May 11, 2023.
However, compared to previous prolonged periods where the base rate stayed under 1% (from March 5, 2009 and March 17, 2022), it’s understandable why some people may be waiting for the rate to fall further.
Unfortunately, due to the wide range of factors that can influence the base rate (and therefore interest rates in the UK), there’s little consensus between financial experts regarding 2025 mortgage rate predictions.
It’s particularly difficult to predict these rates due to various unknowns such as the inflation rate – if the inflation rate remains consistent or falls below the Bank’s target, the base rate will need to be adjusted.
However, as reported by the BBC, the head of personal finance at Hargreaves Lansdown, Sarah Coles, predicts a slight increase in mortgage rates from the end of 2024 until the end of 2025.
For those looking to obtain a fixed-rate mortgage deal, Coles said: “The fact the market is pricing in fewer cuts between now and the end of 2025 means we’re likely to see mortgage rates rise slightly from here.”
“Mortgage rates have fluctuated over the past month, as the market struggled to make its mind up about the path of future rate cuts. With so much uncertainty around, it can be a good idea for anyone with a looming remortgage to secure a rate now.”
Other predictions for the 2025 mortgage rates in the UK suggest that they could decrease.
As reported by Moneyweek, the Organisation for Economic Cooperation and Development (OECD) predicts UK interest rates to fall to 3.5% by early 2026.
Ruth Gregory, the deputy chief UK economist at the consultancy, said: “In light of the Budget, we revised up our GDP and core inflation forecasts. As a result, we no longer think the pace of rate cuts will quicken in the second half of 2025, and we now think rates will fall only as far as 3.50% in early 2026 rather than 3.00%.”
This uncertainty is echoed in recent statements provided by the central bank’s governor, Andrew Bailey.
Following the BoE’s decision to hold the base rate at 4.75% in December 2024, Bailey said:
“We think a gradual approach to future interest rate cuts remains right but with the heightened uncertainty in the economy we can’t commit to when or by how much we will cut rates in the coming year,” as reported by the BBC.
With the next interest rate announcement set for February, time will tell whether rates continue to fall or start to increase in 2025, as predicted by Coles.
Should I remortgage now?
If you’re looking for a clear answer to the question “Should I wait to remortgage or act now?”, then you may be disappointed.
Unfortunately, there’s no one-size-fits-all mortgage advice.
A wide range of personal and financial factors, as well as the current interest rates, will influence whether you should wait to secure a new mortgage deal or act quickly.
That’s why the UKMC team take a more tailored approach to helping our customers decide when the most suitable time is for them to secure a new mortgage deal.
Plus, by taking the time to learn more about your personal and financial circumstances, we can offer personalised advice in the form of poor credit support or guidance regarding government schemes for first-time buyers – whichever meets your specific needs.
From understanding and completing paperwork to negotiating terms and ensuring you meet the lender’s affordability criteria, our experienced team of mortgage advisors can handle a variety of crucial property-purchasing tasks with ease.
Regardless of whether you’re a first-time buyer or remortgaging your existing home, seeking support from an expert mortgage advisor like UKMC can help you to navigate the potentially daunting and confusing world of mortgage deals, lenders, terms, and discounts.
In many cases, their advice can boost your chances of not only obtaining a mortgage, but securing a deal that actually saves you money or better suits your personal or financial situation.
Take the stress out of securing a mortgage with UKMC
If you’re ready to remortgage or want expert mortgage advice before deciding to buy your first home, don’t hesitate to get in touch with one of our advisors today.
Instead of baffling you with complex legal jargon, we’ll break down the process into straightforward steps and explain every step in plain English, ensuring you know exactly what to expect and when!
Regardless of whether you want to release equity to cover some sought-after home improvements or simply secure a competitive interest rate for your very first home, we can help.
Our mortgage experts have an in-depth knowledge of the market, and search through thousands of different deals and lenders to help find the most suitable mortgage arrangement for your needs.
On top of our professional mortgage services, we can also help you to understand your insurance options and let you know when you should consider remortgaging, proving you with a comprehensive service from start to finish.
To arrange your free initial appointment with our down-to-earth team, please feel free to book a time and date that suits your schedule.
If you’d like to learn more about our services, fees, or team, you can also give us a call on 01925 573328, email us at hello@ukmc.co.uk, reach out using our handy online contact form.
Disclaimer
UK Mortgage Centre Limited is an Appointed Representative of Refresh Mortgage Network Limited.
Refresh Mortgage Network Limited is authorised and regulated by the Financial Conduct Authority. We are entered on the Financial Services Register under firm number 1019794.
As a mortgage is secured against your home, it could be repossessed if you do not keep up the mortgage repayments. The Financial Conduct Authority does not regulate some forms of buy-to-let mortgages.
The Financial Conduct Authority does not regulate will writing and taxation and trust advice.
You may be charged a fee for your advice. A typical fee is £495, which would be payable when you receive your mortgage offer. Your dedicated advisor will discuss this further on your free initial phone call.
Registered company number: 15825320
