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By ED MAGNUS Updated: 11:47 EDT, 16 May 2025 The lowest fixed rate mortgage deals are below 4 per cent - and there is a growing expectation that rates may fall slightly further. Mortgage

rates have continued to fall since the Bank of England cut interest rates from 4.5 per cent to 4.25 per cent earlier this month. The central bank is currently expected to cut interest rates

three more times this year, rather than just twice. For the vast majority of households, a mortgage rate of between 4 and 5 per cent will be typical depending on the level of equity or size

of deposit. While the sub 4 per cent rates are mainly reserved for those with biggest deposits or levels or equity in their home, even for people buying with a 10 per cent deposit can now

get as low as 4.34 per cent.  > Best mortgage rates calculator: Check the deals you could apply for  MORTGAGE RATES: WHAT IS HAPPENING The Bank of England opted to cut interest rates in

May to 4.25 per cent. Base rate has dropped by 1 percentage points since August when it was first cut from 5.25 per cent. It's fair to say the mortgage market is somewhat more settled

now.  In 2023, a combination of base rate hikes and worries over inflation figures saw average two-year fixed mortgage rates reach a high of 6.86 per cent in the summer, according to

Moneyfacts, while five-year fixed rates hit 6.35 per cent.  However, mortgage rates still remain far higher than borrowers had enjoyed prior to the surge in 2022. Little more than three

years ago, the averages were hovering around 2.5 per cent for a five-year fix and 2.25 per cent for a two-year.  In fact, as recently as October 2021, some of the lowest mortgage rates were

under 1 per cent. BEST MORTGAGE RATES AND HOW TO FIND THEM Mortgage rates have risen substantially over recent years, meaning that those remortgaging or buying a home face higher costs. That

makes it even more important to search out the best possible rate for you and get good mortgage advice, whether you are a first-time buyer, home owner or buy-to-let landlord. Quick mortgage

finder links with This is Money's partner L&C > Mortgage rates calculator > Find the right mortgage for you  To help our readers find the best mortgage, This is Money has

partnered with the UK's leading fee-free broker L&C. This is Money and L&C's mortgage calculator can let you compare deals to see which ones suit your home's value and

level of deposit. You can compare fixed rate lengths, from two-year fixes, to five-year fixes and ten-year fixes. If you’re ready to find your next mortgage, why not use This is Money and

L&C’s online Mortgage Finder. It will search 1,000’s of deals from more than 90 different lenders to discover the best deal for you. > Find your best mortgage deal with This is Money

and L&C  Mortgage service provided by London & Country Mortgages (L&C), which is authorised and regulated by the Financial Conduct Authority (registered number: 143002). The FCA

does not regulate most Buy to Let mortgages. Your home or property may be repossessed if you do not keep up repayments on your mortgage.  WILL MORTGAGE RATES GO DOWN OR UP?  Mortgage rates

have been falling on almost a daily basis over the past few weeks.  Average two-year fixed mortgage rate fell month-on-month by the biggest margin in over six months, according to

Moneyfacts. It also said the average two-year fixed mortgage rate has fallen to its lowest point since the start of September 2022, before the infamous 'mini-Budget'.  The current

expectation is that the Bank of England will cut interest rates three more times in 2025. They are predicted to end the year at 3.5 per cent. The newfound expectation that interest rates 

will fall faster has fed through into Sonia swaps, an inter-bank lending rate which forecasts where mortgage rates will be in two or five years. Lenders use this to determine fixed-rate

mortgage pricing. As of 16 May, two-year swaps are at 3.77 per cent and five-year swaps were at 3.78 per cent. These will need to fall further for fixed rate mortgages to see any further

dramatic falls. INFLATION AND MORTGAGE RATES SPIKE Mortgage rates first began to increase towards the end of 2021, when inflation started to rise, resulting in the Bank of England increasing

base rate to try and combat it.  The aftermath of the Covid lockdowns, combined with Russia's invasion of Ukraine in February 2022, triggered a huge inflation spike. Central banks were

caught on the hop and rushed to try to rein this in with higher interest rates. MORTGAGE PRICING: A ROUGH GUIDE Mortgage market expectations are reflected in something known as Sonia swap

rates.  These are agreements in which two counterparties, for example banks, agree to exchange a stream of future fixed interest payments for a stream of future variable payments. Mortgage

lenders enter into these agreements to shield themselves against the interest rate risk involved with lending fixed rate mortgages over a period of time. For example, if a bank lends a

mortgage fixed for five years, it wants to have some certainty on what it will cost to fund that over the time period, rather than being dependent on shifting interest rates and potentially

being caught out by big unexpected moves. Put simply, swap rates show what financial institutions think the future holds concerning interest rates. Mortgage rates accelerated after the Liz

Truss-Kwasi Kwarteng mini-Budget in late September 2022, with its wave of unfunded tax cuts that unsettled bond markets. After Truss resigned in October 2022, new Chancellor Jeremy Hunt

reversed nearly all of the mini-Budget announcements. The markets calmed down and the cost of borrowing fell with mortgage rates dropping too.  But following a fresh round of stubbornly high

inflation figures in late spring 2023, markets began betting the base rate would peak at 6.5 per cent.This triggered a summer inflation panic and led to mortgage lenders whacking their

rates up again. Once the inflation worries subsided, interest rate expectations eased substantially but inflation proved stickier than expected in 2024 and the Bank of England ended up

holding base rate at 5.25 per cent. With inflation finally returning to its 2 per cent target, the Bank finally felt comfortable cutting rates to 5 per cent at its August 2024 meeting and

then again in its November meeting. Having held rates in December, it cut again in February. But with inflation rising again, it held rates in March. The ONS revealed that inflation was 2.6

per cent in the 12 months to March, down from 2.8 per cent in the year to February. This was better than markets had forecast. Most economists and personal finance experts think the Bank of

England will proceed cautiously from here. The next decision is on 8 May. MORTGAGE GUIDES SHOULD YOU FIX FOR TWO OR FIVE YEARS?  Britons face a tough choice over whether to fix their

mortgage for two or five years, as the gap between rates on the two narrows.  Five-year fixes are still cheaper on average, though, with the average five-year fix at 5.08 per cent and the

average two-year fix at 5.11 per cent, according to Moneyfacts.  Not so long ago, there was a clear preference among borrowers for five-year fixed rates - but that now looks to be changing

with borrowers split almost fifty-fifty in what they went for last year, according to UK Finance data. Choosing what length to fix for depends on what you think may happen to interest rates

but should importantly take more account of what your personal circumstances are. Key factors include whether you may move soon, how much you prefer the security of fixed payments for longer

and how well you could cope with a rise in mortgage bills. Fixed rates of any length offer borrowers certainty over what their payments will be from month-to-month.  Those opting for a

shorter two-year fix are backing interest rates falling over the next couple of years, or at least staying steady, so that when it is time to remortgage their bills won't rise. With

five-year fixes borrowers are locking in to rates that they know won't change for longer, perhaps either because they believe rates may rise or because they prefer the security.

Five-year fixes were hugely popular when rates were lower. If rates continue to fall, a tracker mortgage without an early repayment charge could put borrowers in a position to take

advantage. However, for all the potential benefit, a tracker product will also leave people vulnerable to further base rate hikes, while also being more expensive than fixed rates at

present. Whatever the right type of mortgage for your circumstances, shopping around and speaking to a good mortgage broker is a wise move. > Check the best mortgage rates based on your

house price and loan size  WHAT ARE THE BEST MORTGAGE RATES? We have taken a look at the best deals on the market based on a 25-year mortgage for a £290,000 property - the current UK average

house price according to the ONS. The mortgage deals below are best in terms of having the lowest rate. They may not be the cheapest deal overall when arrangement fees are also factored in.

  Bigger deposit mortgages Five-year fixed rate mortgages  NatWest has a five-year fixed rate at 3.88 per cent with a £1,495 fee at 60 per cent loan to value.  Barclays has a five-year fixed

rate at 3.89 per cent with £899 fees at 60 per cent loan to value. Two-year fixed rate mortgages  Halifax has a 3.87 per cent two-year fixed rate deal with an £1,099 fee at 60 per cent

loan-to-value.  Barclays has a two-year fixed rate at 3.87 per cent with a £899 fee at 60 per cent loan to value. Mid-range deposit mortgages Five-year fixed rate mortgages  NatWest has a

five-year fixed rate at 4.05 per cent with a £1,495 fee at 75 per cent loan to value.  Principality Building Society has a five-year fixed rate at 4.07 per cent with a £1,395 fee at 75 per

cent loan to value.  Two-year fixed rate mortgages        Principality Building Society has a two-year fixed rate at 3.95 per cent with a £1,495 fee at 75 per cent loan to value.  Barclays

has a two-year fixed rate at 3.95 per cent with a £899 fee at 75 per cent loan-to-value. Low-deposit mortgages Five-year fixed rate mortgages  Virgin Money has a five-year fixed rate at 4.34

per cent with £995 fees at 90 per cent loan to value. HSBC has a five-year fixed rate at 4.39 per cent with £649 fees at 90 per cent loan to value.  Two-year fixed rate mortgages  Virgin

Money has a two-year fixed rate at 4.44 per cent with £995 fees at 90 per cent loan to value.  The Co-Operative Bank has a two-year fixed rate at 4.5 per cent with a £749 fee at 90 per cent

loan to value.  >> Check our our mortgage tracker to compare the latest available deals   TRACKER AND DISCOUNT RATE MORTGAGES  The big advantage to a tracker mortgage is flexibility.

The downside is they are currently more expensive, so it will take a few more interest rate cuts before borrowers starting beating the fixed rate deals. The can sometimes be the case with

discount rate mortgages, which track a certain level below the lenders' standard variable rate.   A fixed-rate mortgage will almost inevitably carry early repayment charges, meaning you

will be limited as to how much you can overpay, or face potentially thousands of pounds in fees if you opt to leave before the initial deal period is up. You should be able to take a fixed

mortgage with you if you move, as most are portable, but there is no guarantee your new property will be eligible or you may even have a gap between ownership. Many tracker deals have no

early repayment charges, which means you can up sticks whenever you want - and that suits some people. Make sure you stress test yourself against a sharper rise in base rate than is

forecast.  COMPARE TRUE MORTGAGE COSTS Work out mortgage costs and check what the real best deal taking into account rates and fees. You can either use one part to work out a single mortgage

costs, or both to compare loans * Mortgage 1 * Mortgage 2