UK mortgage rates are likely to fall soon as lenders react to growing expectations that the Bank of England will cut interest rates more than originally planned. The shift comes after financial markets were shaken by US President Donald Trump’s tariff announcements, sparking global economic uncertainty.
TSB is lowering some of its two-year fixed mortgage rates by up to 0.25% this week, following similar moves by MPowered Mortgages. Analysts now expect the Bank of England to reduce rates three times this year, up from the two cuts previously forecast bringing down borrowing costs.
“Central banks are looking to cut rates to support growth, and lenders are already pricing that in,” said Sarah Coles from Hargreaves Lansdown.
While average two and five year fixed rates held steady at 5.32% and 5.17% this week, experts say they could soon fall, potentially to as low as 3.79% if swap rates remain stable.
However, a slight catch! They likely won’t be available to first-time buyers or those with smaller deposits, and they often come with steep fees. Plus, many homeowners rolling off older fixed-rate deals will still face higher monthly payments than before. According to the FCA, 1.3 million fixed-rate mortgages are set to expire between April and December. As one expert put it: once a big lender cuts rates, others usually follow—so more reductions could be on the horizon.
