UK Homebuyers Face Uncertainty as Mortgage Rate Cuts May Stall
Homebuyers have been cautioned that the recent easing of mortgage rates could slow down, or even reverse, following the latest inflation figures.
After months of gradual decline, UK mortgage rates have begun to edge lower. Last week, two-year fixed rates dropped below 5% on average for the first time since 2022. However, industry experts warn that the downward trend may not last.
Current UK Mortgage Rates
| Mortgage Type | Average Rate | Last Month’s Rate |
|---|---|---|
| Two-year fixed | 4.98% | 5.04% |
| Five-year fixed | 5% | 5.02% |
| Ten-year fixed | 5.66% | 5.6% |
| Two-year variable | 4.67% | 4.91% |
David Hollingworth, associate director at L&C Mortgages, commented: “Mortgage borrowers have been enjoying a market where rates have been dropping.
Fixed rates have been pricing in recent and future cuts, so they have been edging down, with a host of deals now below 4%. Those reductions have tended to come in small increments, but we could see that slow further or even reverse in some cases if the market reacts badly to the threat of higher inflation than was previously expected.
Borrowers holding out for more cuts may want to keep close tabs on mortgage rates. It’s far from doom and gloom but securing a rate now will protect against any turnaround but still allow a further review before completion, if there are further improvements.”
Peter Stimson, director of mortgages at MPowered, was more cautious. He warned: “Today’s painful jump in inflation means that base rate cut may now be pushed back into 2026, and as a result, we are unlikely to see any further rate cuts from lenders in the immediate term.
Competition between lenders is intense but mortgage rates may well have fallen as far as they can for now. They may even creep up over the next month or so as lenders recalibrate in response to rising swap rates.”
The warning comes amid growing concerns that inflationary pressures could undermine the recent relief for homebuyers. Analysts say those considering a mortgage may need to act swiftly if they want to lock in the current rates.
While the market remains competitive, the window for further reductions may be narrowing. Homebuyers are advised to remain vigilant and carefully weigh their options.
