Mortgage rates have fallen by the biggest margin in nearly six months, ahead of the Bank of England’s next base rate decision on 20 March.
After months of stubbornly high rates, the cuts will be welcome news for the 1.8 million people due to remortgage in the remainder of 2025.
Read on to find out how much rates have fallen by, and for advice on whether another base rate cut could be on the cards.
Fixed-rate mortgages are getting cheaper
Data from Moneyfacts shows average rates on two-year and five-year fixed-rate mortgages dropped by 0.13% and 0.1% respectively in February, as lenders relaunched sub-4% mortgages.
The cuts are the biggest in nearly six months, with rates having largely remained high despite reductions in the Bank of England’s base rate. This is partly due to volatile ‘swap’ rates – the interest rates institutions charge when lending to each other.
Some lenders have launched headline-grabbing deals of late, but borrowers will need to be vigilant in checking these deals really offer the best value for money. For example, Santander offered a two-year fix with a rate of 3.99% last month, but it came with a substantial upfront fee of £1,999.
One way to ensure your mortgage balances a competitive rate with low fees is to seek advice from a mortgage broker, who can search the market to find the best deal for your needs.
- Find out more: best mortgage rates
Deals are disappearing quickly
Moneyfacts says the average shelf life of a mortgage deal dropped from 36 days on 1 February to just 16 days on 1 March, as lenders chopped and changed their rates.
This decline has primarily been fueled by banks competing to offer the best deals, leading to more frequent adjustments. In addition, a limited number of market-leading deals were only available for a short period of time, further reducing the average shelf life.
Despite the faster turnover of mortgage products, the number of providers featuring in our top mortgage rate tables remained consistent in January and February, at 16.
Check out our recent story on how long the top mortgage offers last to find out more about why some of the cheapest rates don’t stick around for long.
Will the base rate fall this month?
All eyes will be on the Bank of England next Thursday (20 March) as it makes its latest base rate announcement. We asked Nicholas Mendes of the mortgage broker John Charcol whether he thinks another cut is likely.
He says: ‘I expect the Bank of England to hold the base rate steady. While markets have been speculating about potential rate cuts later in the year, inflation remains too high, making a move this month unlikely.
‘The Consumer Prices Index rose to 3% in January, higher than expected and still well above the Bank’s 2% target. This rise, combined with ongoing wage growth pressures, suggests inflation may not be falling as quickly as policymakers had hoped.
‘The Bank has been clear that it wants to see sustained progress before considering rate cuts, and this latest data will only strengthen its case for holding steady.’
When to think about remortgaging
If you’re in the last six months of your fixed term, you can start searching for a new deal now. See our guide on what to do if you need to remortgage for details on the steps to follow.
If you’ve got more than six months left, it’s best to sit tight for now. If you lock in a deal too early, you may need to pay early repayment charges to your current lender, which can run to thousands of pounds.
If you’re currently on your lender’s standard variable rate (SVR), then you can likely switch to a cheaper deal. Lender SVRs currently average around 7.5%, more than 2% higher than the average fixed-rates.
