Looking Ahead

Good news!! The Bank of England’s base rate has been cut by 0.25% and now sits at 4.25%. Alongside this, we’ve already seen a drop in mortgage rates offered by some of the lenders. all are partially influenced by the less positive geopolitical and economic issues in the UK and worldwide.

A silver lining to Trump’s reciprocal trade tariffs (of which most of the higher percentage tariffs have been paused until early July*), is that mortgage rates have reduced across a number of lenders. Fixed rate deals are influenced by Swap rates, and these initially fell sharply following Trump’s tariff announcements.

The fall is also partially influenced by the Bank of England, and others, looking at balancing the risk of lower economic growth (or possible recession), against the risk of higher inflation.

The market consensus, at present, seems to point to the chance of delivering additional Base Rate cuts this year, on top of the recent drops. This means that there may be positive developments for those who want to raise further funds, remortgage the existing deal, or look to get onto the property ladder with their first mortgage.

Lender Rates

In addition to the aforementioned Swap rates, and Base Rate moves, the interest rate pricing of deals is influenced by other factors, such as any desire by lenders to price competitively to win your business, and, in turn, build their market share.

As it stands, the ‘average’ fixed rates for a 2-, or 5-year deal currently start with a ‘5’, but better rates that begin with a low (or sub) ‘4’ may be on offer. Although the latter generally applies to loans of 60%, or less, against the value of the property.

Additionally, there may be further good news on the horizon, as the industry regulator, the Financial Conduct Authority, is looking to slightly relax the affordability criteria, which could mean that borrowers may be able to borrow more.

Of course, it’s likely that we’ll continue to have yo-yo periods with regard to rates on offer, but borrowers may see lower fixed rate deals in the short term.

Increasing costs elsewhere

If you’re already a homeowner (and staying put), then you may be cheered by the continuing rise in the value of your home.

But what of the day-to-day costs you may face, and would these have an impact on how much you can set aside for mortgage payments?

In addition to any impact on future costs, following the Trump tariffs (where at least a 10% levy remains in place), much has also been said about the financial hit from April across a number of areas closer to home.

Business owners

Those mortgage borrowers who are also business owners may face additional costs from Employer NI contributions. The government is hoping to raise about £25bn a year, following the changes from April.

On top of this, businesses may face increased Business Rate costs.

Homeowners and Renters

This encompasses pretty much all of us, and from April, costs have risen in a number of areas.
Energy bills – a typical household use of gas and electricity will rise by £111 a year.
Water bills – there’s a lot of variation amongst the water companies, but, on average, prices may rise by £120 across the year.
Council tax – rises have occurred throughout the UK.
Car tax – again there are rises here, but will be dependent on the car you own and the fuel it uses. And electric vehicles are no longer tax-exempt.
Broadband, TV licence, & Mobiles – these are all likely to deliver a price hike from April onwards.
Stamp Duty – for those looking to purchase a property in England or N. Ireland from April onwards, the tax rate has returned to its previous higher levels.

*The 90-day pause in applying larger tariffs, announced on 9 April, still means that the baseline 10% tariff on most nations remains in place, as does the 25% tariff for aluminium, steel and cars entering the US. China though – has its own much-higher set of pricing! Of course, the whole situation is highly fluid, and could change at any time.

Whatever your situation, we’d fully assess the suitability of the options on offer. And you can take comfort from the fact that we operate in this sector day-in day-out, plus have the qualifications and expertise to deliver advice that meets your needs.

You may have to pay an early repayment charge to your existing lender if you remortgage.

Your home may be repossessed if you do not keep up repayments on your mortgage.

(Source: Bank of England, 8 May 2025)
(Source: moneyfactscompare.co.uk, May 2025)
(Source: Nationwide, House Price Index, April 2025)
(Source: Bank of England, 20 March 2025)