A cut to Bank of England Base Rate (BBR) looks increasingly unlikely, with the upheaval in mortgage re-pricing leading to a vanishing act of sub-4% fixed mortgages, according to Moneyfactscompare.co.uk analysis.
Rachel Springall, Finance Expert at Moneyfactscompare.co.uk, said:
“Borrowers looking for the lowest fixed rates will be disappointed to see the demise of sub-4% mortgages, but they are not sustainable with swap rates increasing. Lenders look at margins very carefully, so it would be unwise to price their deals too low, if the expectations are for interest rates to rise, even if over the short-term. The mortgage market needs stability, and really, borrowing costs are lower than in recent years, and we have had sub-4% deals on the shelves for over a year (since February 2025). While many of the biggest lenders no longer offer a sub-4% fixed deal, it is a cautious decision. Mortgage rates are rising due to global pressures, not UK fiscal policy, so while not ideal, rate increases are not mirroring the ‘mini-Budget’ fiasco in 2022.
In an unprecedented turn of events, the unrest in the Middle East has led to rising swap rates, which has inflated mortgage rates and caused deals to be pulled from sale, some temporarily. These developments have scuppered expectations for the Monetary Policy Committee to vote for a cut to the Bank of England Base Rate, now much more likely for a hold this week. If such uncertainty is prolonged, and indeed if inflation spikes, we could even see an increase to BBR before the year is over. It really is too early to tell what might happen, but borrowers searching for a new deal should seek advice if they are concerned about rising costs. It is still important to secure a fixed deal compared to a high revert rate, as almost £300 could be saved each month in repayments, and existing borrowers could lock into a new deal six months in advance.”
Average standard variable rate (SVR) is currently 7.13%. Calculations based on a £250,000 mortgage over a 25-year term on a repayment basis. SVR repayment £1,787 per month, versus £1,502 per month on 5.28% two-year fixed rate.
Mary-Lou Press, President of NAEA Propertymark (National Association of Estate Agents), comments:
“The loss of sub-4% fixed rate mortgages will be disappointing for many buyers, particularly first-time buyers already facing affordability pressures.
This shift highlights how sensitive mortgage rates are to wider economic uncertainty, making it harder for people to plan and potentially slowing activity across the housing market.
Even small increases in rates can significantly impact borrowing capacity and monthly costs, reinforcing the need for stability and confidence.
In the longer term, improving affordability cannot rely on mortgage rates alone. Increasing the supply of suitable homes will be key to supporting a healthy housing market.”
