Mortgage rates across the UK are falling sharply, with major lenders, from Halifax to Nationwide and Barclays, announcing headline‑grabbing cuts on fixed-rate deals.
Two- and five-year fixed rates have now averaged just over 5%, with many sub‑4% options available for borrowers with strong equity. This “price war” reflects both falling swap rates and market expectations of a base rate cut on 7 August 2025.
Mortgage rates are falling fast, driven by two key trends:
Falling Swap Rates: These rates, which influence the pricing of fixed-term mortgages, have dropped by around 0.2 percentage points over the past month. This reflects growing market confidence that interest rates are headed lower.
Dovish Signals from the Bank of England: Governor Andrew Bailey recently said interest rates are “on a gradual downward path,” and markets now expect a base rate cut as early as 7 August 2025.
Together, these forces have triggered a price war among lenders, with many reducing rates daily to capture market share.
Nick Mendes of John Charcol describes the current environment as “a fixed-rate price war, with daily rate drops of 0.05% to 0.2%. For low-risk borrowers, now is the time to act.”
With a base rate cut already priced into swap markets, lenders are racing to lock in new customers before margins tighten further, making July’s deals among the most competitive we’ve seen all year.
Get the Homebuilding & Renovating Newsletter
Bring your dream home to life with expert advice, how to guides and design inspiration. Sign up for our newsletter and get two free tickets to a Homebuilding & Renovating Show near you.
Best mortgage rates right now
Swipe to scroll horizontally
Lender
Deal Type
Rate
Fee
LTV
Nationwide
2‑yr fix (purchase, £300k+)
3.81%
£1,499
60%
Halifax
2‑yr fix (remortgage)
3.84%
£1,999
60%
Barclays
2‑yr fix (purchase)
3.89%
£899
60%
Santander
2‑yr fix (remortgage)
3.84%
£999
60%
HSBC
2‑yr fix (remortgage)
3.92%
£999
60%
Virgin Money
5‑yr fix (purchase)
4.19%
£895
85%
BM Solutions
2‑yr fix (BTL remortgage)
2.78%
3% fee
65%
Are mortgage rates going down for first-time buyers?
Yes, and the trend is gaining momentum. While first-time buyer rates are typically higher than those for lower-risk remortgagers, several lenders have begun cutting rates in this segment too.
For example, Nationwide now offers a 2-year fix at 4.13% for borrowers with a 15% deposit, down from over 4.4% just a month ago, offering relief against rising house prices.
David Hollingworth, associate director at L&C Mortgages, explains: “Lenders are not just reacting to falling swap rates, but also undercutting each other. That’s great news for buyers and remortgagers alike.”
What does this mean for self-builders and renovators?
Lower fixed and tracker rates improve affordability, making it easier to fund large-scale projects or refinance existing development loans.
While rates are still higher than pre-2022 levels, the recent drop could create valuable headroom in budgets, especially for those managing staged payments or tight cash flows.
Tracker mortgage holders are already seeing monthly savings, and borrowers nearing the end of fixed deals may now lock in significantly better terms than even a few months ago.
Will rates stay low?
That depends on what happens at the next Bank of England Monetary Policy Committee meeting. Markets currently expect a 0.25% base rate cut in August, with the potential for more later this year if inflation continues to ease.
However, much of this expected easing is already priced into today’s fixed mortgage deals. Unless swap rates fall further, it’s possible that fixed rates may not drop significantly from current levels.
In fact, some lenders could pull their lowest rates if margins tighten or funding costs rise.
Mortgage rates have clearly fallen in July 2025, with several sub‑4% deals now available, particularly for low-risk borrowers and remortgagers. But with markets already anticipating an August rate cut, the best rates may already be here.
If you’re nearing the end of a fixed deal or ready to buy, acting soon could help you lock in some of the most attractive rates of the year.
As mortgage rates continue to shift, it's important to stay informed about the latest trends in buying a house, especially in light of ongoing mortgage rate increases.
Whether you're navigating the effects of mortgage rate rises or looking ahead to potential changes in stamp duty, being proactive in your decision-making can help you make the most of current opportunities.
News Editor Joseph has previously written for Today’s Media and Chambers & Partners, focusing on news for conveyancers and industry professionals. Joseph has just started his own self build project, building his own home on his family’s farm with planning permission for a timber frame, three-bedroom house in a one-acre field. The foundation work has already begun and he hopes to have the home built in the next year. Prior to this he renovated his family's home as well as doing several DIY projects, including installing a shower, building sheds, and livestock fences and shelters for the farm’s animals. Outside of homebuilding, Joseph loves rugby and has written for Rugby World, the world’s largest rugby magazine.
