UK Mortgage Rates: What You Need to Know – 1 August 2025

If you're thinking about buying a home or remortgaging, understanding the current mortgage landscape is essential. Here's a quick breakdown of what’s happening with UK mortgage rates as of early August 2025.

Interest Rates: Where Are We Now?

The Bank of England cut the Base Rate to 4.25% back in May. However, inflation ticked up slightly in June, rising to 3.6% from 3.4% in May. While this may delay any major drops in mortgage rates, the market remains relatively stable.

Average Mortgage Rates Today

2-year fixed-rate mortgages are averaging around 4.52%, with small weekly decreases.

5-year fixed-rate mortgages are slightly lower, averaging 4.51%.

The lowest fixed rates on the market are still under 4% for those with larger deposits and strong credit.

Rates can vary depending on your deposit size (known as loan-to-value or LTV). Typically, the more you can put down upfront, the better the rate you’ll be offered.

 What This Means for Buyers

For a typical first-time buyer home priced at £228,551, taking out a five-year fixed mortgage at 85% LTV could mean monthly repayments of around £1,085 over a 25-year term.

If you’re working with a smaller deposit, like 5% or 10%, rates will be higher—but even here, we’re seeing small weekly shifts that could benefit borrowers.

When Will Mortgage Rates Drop?

Experts suggest the Base Rate could drop further—possibly to 4% by the end of 2025—but that depends on inflation stabilising and no unexpected shocks to the economy. For now, any decreases in mortgage rates are likely to be slow and steady rather than dramatic.

How Much Can You Borrow?

Your mortgage offer depends on an affordability check that looks at your income, expenses, and the size of your deposit. A larger deposit means a lower LTV, which usually leads to better rates.

To estimate your borrowing power, try a mortgage calculator, or apply for a mortgage in principle to get a personalised result.

Need help finding the right mortgage?

Whether you’re buying your first home or looking to remortgage, we’re here to guide you through the process with the latest rates and tools.