Mortgage rate predictions 2025
Catherine Alexander
Partner & Mortgage and Protection Adviser at GDA
At the end of 2024 mortgage rates were continuing their downward trajectory from the highs we saw in August 2023, when the Bank of England's base rate reached 5.25%. There was still some volatility still in the mortgage market, and we saw rates increase slightly despite the Bank of England’s decision to cut interest rates again to 4.75%. This was due to the expectation that interest rates are likely to stay higher for longer.
More rate cuts are predicted for 2025, with the Bank of England Governor Andrew Bailey signalling that the UK could see four quarter point interest rate cuts in 2025. This would see interest rates fall from 4.75% to 3.75%. However, interest rates predictions are difficult and will need to be revised according to what happens with inflation - the next meeting of the Bank of England’s Monetary Policy Committee will be on the 6th February 2025. We’re also seeing very high gilt yields at the moment, this is important to consider because this affects the ‘swap’ rates, which financial institutions pay to other institutions, to acquire funding for future lending. Swap rates are a best guess as to where interest rates will be in the future, and tend to move in tandem with Gilt yields.
On 13th January 2025, the average mortgage rates are:
2 year fixed-rate (75% LTV): 5.19% across all lenders, 4.59% across the big six lenders*.
5 year fixed-rate (75% LTV): 4.98% across all lenders, 4.33% across the big six lenders.
2 year variable rate (75% LTV): 5.34% across all lenders, 5.34% across the big six lenders.
Standard variable rate (SVR): 8.24% across all lenders, 7.00% across the big six lenders.
*The big six lenders are: Lloyds Banking Group, Nationwide Building Society, NatWest Group, Santander UK, Barclays, HSBC Bank.
In the current market while rates are still volatile, if your current mortgage rate is coming to an end make sure that you start looking at the deals available as soon as possible and lock in a new rate in case the lender decides to withdraw it from the market. You can then keep the rate under review and see if a better rate becomes available that you could swap to.
When it comes to your mortgage you need to consider what’s best for your individual circumstances, not just the rate being offered. Speak to us so that we can explain your options and find the best mortgage deal for you.
This article isn’t personal advice. If you’re not sure whether a course of action is right for you, ask for financial advice. Your home may be repossessed if you do not keep up repayments on your mortgage.
