While the series of base rate cuts last year punished savers, those taking out a mortgage have benefited from cheaper deals, with the average two- and five-year fixed rates finally falling below 5% in 2025 (reaching 4.85% and 4.94% respectively at the start of this month). However, in addition to the base rate, other factors, such as swap rates and the broader economic situation, can influence the price of mortgages.
“Wider market uncertainty is starting to impact mortgage rate setting,” Springall commented, adding that “swap rates have been on the rise over recent weeks”. As a result, many lenders may put any cuts to their mortgage products on hold, while some major providers have even raised rates over the past week.
However, there are still competitive deals to be found, and Oliver Dack, Spokesperson at Mortgage Advice Bureau, cautions that “although the Bank of England didn’t have any surprises in store today, borrowers shouldn’t be complacent”.
“There will likely be many who let the late December base rate cut fly under the radar, amid the busy festive season and inclement weather,” he continued, pointing out that many borrowers, particularly those sitting on their lender’s Standard Variable Rate (SVR), “could stand to benefit from securing a new deal”.
“While there are expectations for the cost of borrowing to come down in 2026, there are never any guarantees, and it could prove more cost effective to lock into a fixed deal sooner rather than later,” Dack explained.
Indeed, Springall estimates that homeowners could save around £350 per month by securing a two-year fixed deal at the average rate of 4.85% instead of paying the average SVR of 7.15%. Calculations based on a £250,000 mortgage over a 25-year term on a repayment basis.