Mortgage borrowing rates have continued their downward trend thank in part to the latest Bank of England rate cut.
The average standard variable rate (SVR) has fallen further below 8% month-on-month and stands at 7.58%, down from 8.18% a year ago.
Since May 2024, the average two-year fixed rate has fallen from 5.91% to 5.18% and the average five-year fixed rate has fallen from 5.48% to 5.10%; both are down month-on-month. These average rates were 5.32% and 5.18% respectively last month.
On a 10-year fixed rate mortgage, the average rate was 5.97% in May 2024. This rate has fallen to 5.51% and is down month-on-month.
| Mortgage market analysis | ||||||
| Average mortgage rates | Dec-21 | May-23 | May-24 | Nov-24 | Apr-25 | May-25 |
| Standard variable rate (SVR) | 4.40% | 7.37% | 8.18% | 7.95% | 7.60% | 7.58% |
| Two-year fixed mortgage | 2.34% | 5.26% | 5.91% | 5.39% | 5.32% | 5.18% |
| Five-year fixed mortgage | 2.64% | 4.97% | 5.48% | 5.09% | 5.18% | 5.10% |
| 10-year fixed mortgage | 2.97% | 5.00% | 5.97% | 5.58% | 5.63% | 5.51% |
| Average rates shown are as at the first available day of the month, unless stated otherwise. Source: Moneyfactscompare.co.uk | ||||||
Rachel Springall, finance commentator at Moneyfactscompare.co.uk, said: “Mortgage rates are on a downward trend, which will be welcome news for the millions of borrowers looking to refinance this year. The driving force behind the recent falls has been volatility in swap rates, with lenders rushing to pass on cuts to fixed rates in their range. This momentum has led to the average two-year fixed rate dropping to its lowest point since September 2022, which was a few weeks prior to the notorious fiscal announcement, or ‘mini-Budget’, that saw markets panic and mortgage rates skyrocket.
“The mortgage market is undoubtedly calmer now by comparison, despite a rush to reprice fixed deals, but lenders are going to have to work incredibly hard in the coming months to balance new business and keep a close eye on their rate margins. Those borrowers coming off a cheap fixed rate would be wise to refinance or risk seeing their monthly repayments soar by falling onto a higher revert rate. Despite consecutive falls to the average Standard Variable Rate (SVR), the incentive to switch remains as a typical mortgage borrower being charged the current average SVR of 7.58% would be paying £373 more per month, compared to a typical two-year fixed rate*.
“There is an expectation (though subject to much debate) that the Bank of England base rate will be cut several times before the year is over, due to wider economic uncertainty and concerns over inflation. Those borrowers concerned about their homeownership aspirations will need support and innovation from lenders. First-time buyers are the lifeblood of the mortgage market, and they are essential to keep the market moving. Not everyone can rely on the ‘Bank of Mum and Dad’ so borrowers could be exhausting all their savings to secure their dream home. This then can pose a danger should house prices plummet, as it can leave borrowers in negative equity and, in the worst instances, turns them into mortgage prisoners.
“Borrowers need to feel comfortable with their mortgage and understand the implications of missing any repayments. Any relaxation to stress tests must be deployed with care and not to the detriment of borrowers later down the line. Consumers concerned about their mortgage or struggling to find an affordable home would be wise to seek advice from a broker to assess the latest deals.”
UK Finance has also published relevant data on the total number of mortgages and data on what a change in Bank Rate would do to average monthly mortgage costs.
Residential mortgages outstanding
This table shows the split of mortgages across fixed rates, trackers and standard variable rates.
| Mortgage type | Number | % of total |
| Fixed | 7,104,000 | 85% |
| Tracker | 591,000 | 7% |
| SVR | 540,000 | 6% |
| Total | 8,404,000 | 100% |
Of the total number of fixed rate deals, UK Finance analysis shows that around 1.6 million will end in total in 2025.
Further analysis
This table shows average monthly payments and interest rates for various different mortgage types.
| Metric | Tracker | SVR | Fixed |
| Average balance outstanding | £139,042 | £66,576 | £167,691 |
| Average current mortgage interest rate | 5.93% | 7.38% | 3.65% |
| Average current monthly interest payment | £687 | £410 | £510 |
| Average total payments (for borrowers on capital and interest) | £991 | £652 | £943 |
Rate change scenarios (change from current monthly payment)
This table shows what would happen to average monthly payments for tracker and standard variable rate mortgages if the Bank of England changes interest rates.
Those on fixed rate mortgages will see no changes to their monthly payments.
| Bank Rate change | Tracker | SVR | Fixed |
| -0.50% | £-57.93 | £-27.74 | £0 |
| -0.25% | £-28.97 | £-13.87 | £0 |
| 0.00% | £0.00 | £0.00 | £0 |
| +0.25% | £28.97 | £13.87 | £0 |
| +0.50% | £57.93 | £27.74 | £0 |
*Average standard variable rate (SVR) is currently 7.58%. Calculations based on a £250,000 mortgage over a 25-year term on a repayment basis. SVR repayment £1,860 per month, versus £1,487 per month on 5.18% two-year fixed rate.
Property industry reacts to Bank of England’s decision to cut interest rates
Read the orginal article: https://propertyindustryeye.com/interest-rate-impact-mortgage-borrowing-rates-fall/
