While the latest Bank of England base rate decision in March was to hold the existing central rate of interest at 4.5% for the time being, there is still plenty of optimism that it will fall again before the end of 2025. Although inflation levels have been volatile, many economists believe they will continue to normalise as the year progresses, giving the Monetary Policy Committee (MPC) more confidence to reduce the base rate again.
The MPC previously reduced the base rate three times in the past 12 months, from 5.25% back in August of 2024, down to its current level of 4.5%, with cuts in August, November and February. Since Donald Trump’s recent announcement of a tariff-based trade agreement between the US and external nations, including the UK, there has been growing speculation that the Bank of England will lower the base rate sooner rather than later this year.
The greatest influential factor in mortgage pricing is the movement of the Bank of England base rate. Some of our brokers have shared their predictions about the future of mortgage interest rates for the remainder of 2025 based on recent economic changes:
Lee Trett, Mortgage Adviser & Director
“Markets are pricing in four more cuts to the base rate for the remainder of the year, but I doubt the MPC will factor these in in one fell swoop. The Bank of England will likely reduce the base rate by a quarter of a point in May, down to 4.25%.
"This should lead to further reductions in mortgage interest rates, but as banks are already beginning to factor in reductions since the market volatility from Trump’s tariff announcement, there won’t be an immediate, dramatic drop.”
Lee Trett - Mortgage Advisor & Director
Claire Jopson, Head of Adviser Development
“While inflation has risen gradually during the first quarter, the fall in oil price could lessen this, paving the way for the Bank of England to factor in the substantial reduction expected in the base rate this year, from 4.5%, down to 3.5%.
“It’s difficult to say if, how, and when these reductions will be implemented, however, as there is still some uncertainty about the longevity of the impact of Trump’s tariffs, and indeed, whether he will remain rigid, or show any flexibility to the UK.
“Lenders have remained competitive for the first quarter and continue to make adjustments based on the current economic uncertainty. I feel that they will continue to do so, but even if the MPC decides to ‘double down’ on May’s expected reduction and cut the base rate to 4%, lenders are likely to proceed with a more cautious and gradual drop in mortgage rates.”
Claire Jopson - Senior Mortgage Advisor
John Tarazi, Mortgage Advisor & Director - Buy-to-let mortgage rates forecast
“We’ve seen a rapid decline in swap rates recently, and with the strong demand for rental property, it’s likely we’ll continue to see the base rate fall. Coupled with the US tariffs recently imposed on the UK, I expect mortgage rates to fall fairly quickly, which will be particularly beneficial to landlords.
“In fact, some lenders are already making sub 4% rate announcements, including Coventry Building Society, who have already reduced buy-to-let rates by up to 0.25%. I think that while the market is erratic at the moment, those looking to take out a mortgage or remortgage are in a great position. I expect much more attractive mortgage deals, potentially into the low 3% bracket to be available before 2025 is out.”
John Tarazi - Mortgage Advisor & Director
Conclusion: Will mortgage rates go down in 2025?
Although our brokers are in agreement that mortgage interest rates will fall further in 2025, the rate at which this will happen is difficult to predict. However, keep in mind that rate reductions could be much more gradual than some economists are predicting. If you’re due to remortgage soon, it’s unlikely that waiting for rates to fall is the right move, as standard variable rates are still going to be higher than current fixed-rate deals.
Those within the 4-6 month transfer window are in the strongest position. They should look to lock in a competitive deal now, safe in the knowledge that they won’t miss out on any reductions expected during that period. Lenders allow those within their deal transfer period to lock in a new rate without any commitment until their existing deal date ends.
