Why Now Could Be the Perfect Time to Lock In a Low Fixed-Rate Mortgage:
High 3% to Mid-4% Deals Explained

Why It May Be the Right Time To Fix Your Mortgage
As 2025 draws to a close, many UK lenders are offering fixed-rate mortgages in the high 3% to mid-4% range — a level that hasn’t been widely available in recent years. With inflation cooling and expectations growing that the Bank of England could cut its base rate again soon, locking in a fixed rate now may offer stability and value for borrowers.

Your home may be repossessed if you do not keep up repayments on a mortgage or any other debt secured on it.

What Is Driving Fixed-Rate Reductions

Bank Rate, Inflation and Lender Pressure
The Bank of England’s base rate currently stands at 4%, following a cut in August 2025.
In recent months inflation has cooled (to around 3.6–3.8%), helping reduce pressure on the Bank of England to maintain high rates — and boosting expectations of further cuts.
As a result, lenders are responding: a number of recent fixed-rate mortgage deals are now available below 4%.

Swap Rates, Gilt Yields and Mortgage Pricing
Fixed mortgages are often priced using swap rates and government bond yields. Recent softening in swap rates and yields has reduced the cost for lenders — and those savings are being passed on through lower fixed interest rates.
This makes the current window one of the most competitive in recent years for fixed-rate deals.

What Deals You Can Find Right Now

• Some major lenders are advertising two-year fixed rates around 3.70–3.93% at 60% loan-to-value (LTV).

• Five-year fixes have also dipped into the sub-4% or low-4% range for borrowers with reasonable deposits.

What This Could Mean for Different Borrowers

First-Time Buyers and Homemovers
For buyers entering the market, locking in a fixed rate now could provide payment certainty, even if rates fall further. Given the volatility of variable deals, a fixed rate offers budgeting peace of mind.

Remortgagers and Existing Borrowers
If your existing deal is expiring soon, securing a fixed rate now could protect you before any rate increases or uncertainty returns — all while rates remain historically low compared with the past 2–3 years.

Buy-to-Let Landlords
Lower fixed rates may improve cashflow stability for landlords — especially useful given wider cost pressures. However, affordability, deposit size and rental yield remain key considerations.

What Could Change — And What To Watch
The Bank of England has indicated that while interest rates may have peaked, future moves will depend on economic data such as inflation, wages and labour market strength.
If inflation spikes again, or gilt yields rise, lenders may raise fixed rates once more. So while current deals are attractive, they are not guaranteed to stay this low indefinitely.

Snapshot Of Key Mortgage Market Numbers (as of early December 2025 London)

• Bank of England base rate: 4.00%

• Some 2-year fixed deals: around 3.70–3.93% (at 60% LTV)

• Some 5-year fixed deals: low 4% range (varies with LTV and borrower profile)

What This Means For You

If you are buying soon, remortgaging or coming off a current deal — and stability or budgeting certainty matters — now looks like one of the more favourable times in recent years to consider fixing. But because market conditions can shift, staying in touch with a qualified mortgage adviser remains valuable.

The information provided in this article is for general guidance only and does not constitute personal or regulated financial advice. If you’d like to understand what these moves could mean for you, speak to Mortgage One, we can explain your options and timings based on your specific circumstances.

Some Buy to Let mortgages are not regulated by the Financial Conduct Authority.

FAQs

1. Why are fixed mortgage rates falling now?
   Falling inflation, a stable Bank of England base rate and lower swap rates and gilt yields have reduced the cost of fixed-rate lending — prompting lenders to pass the savings to borrowers.

2. Could mortgage rates drop further?
   It is possible: if inflation continues to ease and the Bank of England cuts rates further, fixed-rate mortgages could slip lower. But such moves depend on economic data and are not guaranteed.

3. Should I choose a 2-year or 5-year fixed deal?
   A 2-year fix offers flexibility and may suit those who expect rates to drop further. A 5-year deal gives longer-term security — useful if you value payment stability or plan to stay in the property for several years.

4. If I fix now, can I switch later if rates drop further?
   Yes — but switching may involve early repayment charges, new valuation or arrangement fees and affordability checks. Check with a qualified mortgage adviser.

5. Are low fixed rates available to everyone?
   Not always — the best deals often require a reasonable deposit (for example 60% loan-to-value or better), satisfactory credit and a suitable financial profile.

6. If rates rise again, will my fixed mortgage change?
   No — once you fix a rate, your repayment stays the same for the fixed term. Fixed-rate mortgages protect you from rate rises during that period.