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What’s happening with mortgage and interest rates now?

A further cut to Base Rate has been forecasted by the end of the year. And by December 2028, it could fall to about 3.25%, although this depends on what’s happening in the wider economy.

Last week, the Base Rate was cut for the first time in more than four years, to 5%, after being held at 5.25% since August 2023. This follows inflation falling to the Bank of England’s 2% target for the first time since 2021 in the month to May, and remained at 2% in the month to June. The current average mortgage rate for a five-year fixed rate mortgage is 4.86%, down from 4.87% last week. The current average rate for a two-year fixed rate mortgage is 5.24%, down from 5.25% last week. The lowest available five-year fixed rate has dropped below 4% this week to 3.95%, and the lowest available two-year fixed rate is 4.39%.