Will mortgage rates fall? Should you fix now or wait? Brokers give their views as two-year rates drop below five-year fixes

The normal trend of shorter fixes having better interest rates has been slowly returning in recent months, with the lowest rates on two, five and 10-year fixed mortgage deals for homebuyers now 3.73%, 3.85% and 4.34% respectively.

Historically and typically, interest rates get more expensive the longer you fix your mortgage for. But this trend was flipped on its head following the then Government's 'mini budget' in 2022, when interest rates suddenly spiked and rates on five-year and some 10-year deals began undercutting those of shorter fixes. This was due to financial markets reacting negatively to the mini budget, which pushed up the cost of shorter-term borrowing.

In light of the latest developments, we've asked four mortgage brokers for their views on what's next for mortgage rates and what borrowers should be thinking about. If you need bespoke advice, speak with a mortgage broker.

1. Can we expect any further cuts to the base rate this year?

David Hollingworth, L&C Mortgages: "There will still be hope that base rate can fall again this year and potentially into next year as well. However, the latest decision to cut was tight and some [Monetary Policy] Committee members preferred to hold amid concern that inflation could remain higher for longer than previously hoped."

Ben Thompson, Mortgage Advice Bureau: "The next cut will come either when the inflation outlook is properly under control and reducing, or the economy is struggling for growth. If pushed, I would say at most we get one more cut late in the year."

2. Have lenders already factored in potential future base rate cuts on their current mortgage deals?

Nicholas Mendes, John Charcol: "To some extent, yes. Fixed-rate pricing is driven by swap rates [which mortgage fixed-rate deals are indirectly linked to], which reflect where markets think the base rate is heading over the next two to five years. This forward-looking approach means some of the anticipated cuts are already priced in."

Aaron Strutt, Trinity Financial: "Mortgage rates have been edging down even without base rate cuts. The money markets change very quickly but it does not look like there are big price reductions expected."

David Hollingworth, L&C Mortgages: "Markets have already anticipated that base rate will continue its downward trajectory. We're not likely to see improvements to fixed rates turbo charged by the recent cut, as that was already priced in."

3. What will happen to fixed-rate deals in the short to medium term?

Nicholas Mendes, John Charcol: "Rates have been edging lower in recent weeks, helped by a fall in swap rates and a wave of competition between lenders. Many banks are behind on their annual lending targets, so they're sharpening prices to win remortgage business, which is why we're now seeing a handful of two- and five-year deals dip below 3.8%.

"Over the next few months, I expect gradual reductions rather than dramatic falls. If inflation and labour market data hold steady, we could see best-buy rates move towards the mid-threes in 2026 but, as we've seen before, markets can turn quickly."

Aaron Strutt, Trinity Financial: "It is tricky to predict what is going to happen to mortgage rates but it does not seem unreasonable to expect them to edge down a bit over the coming months, especially as we head towards the end of the year. Lenders often incentivise borrowers with cheaper rates so they can hit their lending targets especially as the property purchase market slows down."

4. Do two-year fixes now represent better value than five-year fixes?

Ben Thompson, Mortgage Advice Bureau: "There is no right or wrong answer to choosing between two- or five-year fixes. Generally, if you're borrowing a lot of money and stretching yourself, avoid rate rise risks and fix for five years or maybe longer. If not, then two years makes sense today (for the first time in quite some time)."

Aaron Strutt, Trinity Financial: "Borrowers need to select their mortgage rate based on their attitude to risk and their financial situation rather than just taking the cheapest fix rate because it has the lowest monthly repayments. If you are remortgaging there are lots of low- or no-fee fixed rates to choose from and they also come with a free property valuation and a free legal service."

Nicholas Mendes, John Charcol: "A two-year fix might appeal if you expect rates to fall further and want the option to re-fix sooner. But you also need to factor in the potential cost of multiple arrangement fees and your longer-term plans for the property.

"Five-year fixes can provide certainty and protect against the risk of rates rising again. It's less about picking the cheapest headline rate today and more about finding the structure that fits your circumstances and risk appetite."

5. So is now a good time to fix or not?

Nicholas Mendes, John Charcol: "Now can be considered a good time to fix. Current mortgage rates already reflect the market's expectations for further base rate cuts, as these are priced into swap rates. That means there’s little advantage in waiting for the Bank of England to act, since lenders have anticipated much of this already.

"With competition high, banks are working on tight margins, so further reductions are likely to be minimal for borrowers with low loan-to-value (LTV) ratios. The greater scope for cheaper rates lies at higher LTV levels, where lenders have more room to actively sharpen mortgage rates."

Aaron Strutt, Trinity Financial: "It is hard to argue that it isn't a good time to take a fixed rate mortgage. There is a fair chance that rates will come down over the next year but there are no guarantees."

David Hollingworth, L&C: "No-one knows what rates will do and there's still some uncertainty over rate movements. For stability, fixed rates will always be the right call and now does look a good time with plenty of healthy competition in the market and especially when compared to the ups and downs of recent years."

6. Are variable rate mortgages, such as trackers, worth considering right now?

Nicholas Mendes, John Charcol: "For some borrowers, yes. Trackers can pass on any further base rate cuts straight away, which could work in your favour if rates fall as expected. But they also leave you exposed if the Bank of England changes course. With fixed rates now available below 4%, trackers are not automatically the cheaper option at present, so it really comes down to your view on rate direction and your comfort with risk."

Aaron Strutt, Trinity Financial: "It really depends on your situation. Most borrowers take trackers for the flexibility, as many of them do not have early repayment charges, which is ideal if you are unsure about your immediate personal or financial situation.

"A tracker mortgage means there's less chance you will have a big exit fee to pay if you sell your home and repay the mortgage. Many of them also have 'switch to fix' options where borrowers can take a fixed rate with their existing lenders without being penalised."

7. Has it become easier to borrow more money on a mortgage?

David Hollingworth, L&C: "Many lenders have revised their 'stress rates' which will mean that many will find they can borrow more. There has also been a change in the rules that limited the amount of lending that could be offered above 4.5x income.

"Lenders were already offering higher multiples to eligible borrowers but should now have the scope to be more flexible. That could help more borrowers, with multiples of 5.5x or more being offered by more lenders. If you thought a mortgage was out of reach it could be worth revisiting the market to take fresh advice on where things are now."

Aaron Strutt, Trinity Financial: "Just because your bank isn't offering to issue you with a large enough mortgage, it does not mean another one won't. Some lenders are giving larger loan sizes to first-time buyers and higher earners but generally speaking more generous loan sizes are available across the market."

8. What if my current mortgage deal still has a few months to run?

Nicholas Mendes, John Charcol: "If your mortgage deal is ending soon, start reviewing options four to six months before expiry. Many lenders will let you secure a rate early and then switch to a lower one before completion if the market improves. That way you're protected if rates rise but can still take advantage if they fall.

"For buyers, preparation is key, as the best deals can vanish overnight. Even in a calmer market, speed and organisation often make the difference between securing a top rate and missing out."