Mortgage Rate Forecasts 2025: How Will Your Monthly Repayments Change This Year?

With financial pressures mounting and interest rates still fluctuating, many homeowners and first-time buyers across the UK are left wondering: how much will my mortgage repayments rise or fall in 2025?

Though the economic outlook is mixed, one thing is certain — any movement in interest rates could significantly impact your monthly budget.

Whether you’re preparing to remortgage, buy your first home, or move house, understanding the forces shaping mortgage rates this year can help you plan more confidently.

From the Bank of England’s rate decisions to global economic events like US trade tariffs, this guide explores what’s driving rate changes, what mortgage experts predict for the rest of the year, and how different borrower types — from first-time buyers to home-movers — could be affected.

What Determines Mortgage Rate Movements?

At the heart of most changes in mortgage costs lies the Bank of England’s base rate.

As of mid-2025, the Bank Rate sits at 4.5%, having remained stable for several months following efforts to curb inflation in 2024.

This base rate affects what commercial lenders — like banks and building societies — charge for mortgages and other loans.

However, the base rate is not the only factor influencing mortgage deals.

Fixed-rate mortgages, for instance, are heavily shaped by swap rates — financial instruments reflecting the market’s expectations for future interest rate levels.

These swap rates fluctuate depending on economic forecasts, inflation expectations, and even political events like elections or trade disputes.

In general:

• Fixed-rate mortgages depend more on swap rates.

• Tracker mortgages follow the Bank of England rate directly.

• Standard variable rates (SVR) are at the lender’s discretion but often influenced by the base rate.

How Does It Affect You?

For borrowers already locked into fixed-rate mortgages, your repayments are protected for the term agreed — usually two or five years.

But once your deal ends, you’ll either need to remortgage or revert to your lender’s SVR, which can be much higher.

Those on tracker or SVR mortgages will feel changes in interest rates more immediately.

For every 0.25% change in the base rate, a homeowner with a £200,000 mortgage could see their monthly repayment move by roughly £25 to £35, depending on term and deal type.

Current Snapshot: Where Rates Stand in 2025

According to Moneyfacts, as of late April 2025:

• The average two-year fixed mortgage across all loan-to-value (LTV) brackets is 5.23%

• The average five-year fixed rate sits slightly lower at 5.12%

Some lenders are now offering more competitive products — particularly for borrowers with strong credit histories and substantial deposits — including sub-4% deals for select five-year fixes.

But what lies ahead for the rest of the year?

Expert Predictions for 2025

While predicting exact rate movements is notoriously difficult, a consensus is beginning to form among market analysts and brokers.

Twelve leading voices from across the mortgage and property sector — including JLL, Yopa, Carter Jonas, and Yellow Brick Mortgages — have shared their expectations for 2025’s end-of-year outlook.

There is widespread consensus that rates are not expected to decrease significantly this year.

At best, the Bank of England may deliver one or two modest rate cuts, depending on inflation data and global economic pressures, such as potential US tariffs.

To help visualise how different outcomes might affect mortgage repayments, let’s examine some realistic scenarios.

Mortgage Repayment Forecasts: How Different Base Rate Moves Could Affect You

The following tables highlight potential monthly repayment changes based on whether the Bank of England cuts, holds, or increases the base rate — across first-time buyers and home-movers on two-year and five-year fixed deals.

First-Time Buyers – Two-Year Fixed Deals

First-Time Buyers – Five-Year Fixed Deals

Home-Movers – Two-Year Fixed Deals

Home-Movers – Five-Year Fixed Deals

What Should Borrowers Do Now?

With so much uncertainty in the air, it can be difficult to know when to act.

Here are a few general pointers:

✅ For First-Time Buyers

• Consider longer-term fixes if you want repayment certainty.

• Compare products across multiple lenders — don’t assume your bank offers the best deal.

• Speak with a mortgage adviser to assess your affordability and eligibility before house-hunting.

✅ For Those Nearing End of a Fixed Term

• Monitor the market now and prepare to remortgage early if your deal expires in the next 6 months.

• Consider securing a new deal while rates are still stable, as waiting could cost you if rates rise unexpectedly.

✅ For Homeowners on Variable or Tracker Mortgages

• You may benefit if rates fall, but be aware of upward pressure if inflation spikes.

• Consider switching to a fixed deal if budget certainty is important to you.

Conclusion: A Year of Gradual Shifts, Not Shocks

While a major plunge in mortgage rates is not expected, incremental reductions remain likely, particularly if inflation continues to ease and global markets stabilise.

For many borrowers, this could mean modest savings on repayments — or at least avoiding further hikes.

However, political developments, international tariffs, and upcoming elections — particularly in the US — could quickly shift expectations.

As always, staying informed and seeking tailored advice is key.

Whether you’re securing your first home, moving up the property ladder, or reviewing your current deal, 2025 will reward proactive and informed decision-making.