Looking Ahead

BASE RATE drops to 4% – the fifth cut since last August.

EXCELLENT NEWS!! Base Rate was cut by 0.25% to 4%, and this decision should help boost consumer confidence. The drop, though, was widely expected by the markets, with many lenders already factoring this into their pricing.
(Source: Bank of England, 7 August 2025)

Those with mortgages will be affected in various ways. People with tracker deals, which track the Bank’s Base Rate, could see an immediate reduction on monthly repayments. This applies to about 600,000 borrowers.
(Source: UK Finance, December 2024)

Additionally, those looking to buy a new home or enter the property-owning sector, will also be encouraged by the rate drop.

Fixed Rate deals

However, the vast majority of mortgage holders are on fixed rate deals, so there’s no change for them – aside from those who are assessing their options as they move towards the end of their current deal period.

Competition amongst lenders

The interest rate pricing of deals is also influenced by other factors, such as Swap Rates, and world events. A further major consideration is the desire by mortgage lenders to price competitively to win your business, and, in turn, build their market share. Currently, we are seeing a price war amongst some of those lenders, and that can only be good for borrowers – both existing and those hoping to step onto the property ladder.

Combine all of these elements, and it’s no surprise that there’s so much movement in the marketplace. This is why it’s important to seek advice – to help make sense of your options, and possibly lock in a rate, if your mortgage deal ends soon.

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.
(Source: moneyfactscompare.co.uk, August 2025)

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.

Low deposit options

Continuing the good news theme, the government introduced a permanent, new Mortgage Guarantee Scheme in July. It’s designed to deliver consistent availability of loan-to-value mortgage products in the realms of 91-95%.

Mortgages offered through the UK-wide scheme will enable eligible first-time buyers and home movers to buy a property with a deposit as low as 5%.

The scheme will deliver a government-backed guarantee for the participating lenders, effectively insuring against a portion of any potential losses on those mortgages.

Its creation should help deliver further positive sentiment in the marketplace and sit alongside normal lender offerings which require a 5% deposit (or less, in some cases).

Positive developments

This scheme, along with some lenders relaxing stress tests and the ongoing considerations about loan-to-income rules, delivers a great combination for those struggling to afford a mortgage.

However, those borrowing at the higher ends of the loan-to-value spectrum will have little equity in their homes as a result, and would be more exposed should house prices drop.

Therefore, seeking professional advice before entering any arrangement is vital, to ensure that you meet the criteria required, and that the deal is suitable for your needs.

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

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