Some ‘good news’ for mortgage borrowers despite base rate being maintained

Mortgage borrowers may still find reasons for optimism as many lenders continue to cut fixed rates despite the Bank of England keeping its base rate at 4 per cent on Thursday, experts said.

Despite the decision to keep interest rates steady, there have been positive signals from the Bank that inflation has now peaked and is expected to fall in the coming months.

Bank governor Andrew Bailey said a cut in the base rate would only happen after “we need to make sure inflation is on track to return to our 2% target”.

Personal finance analyst Alice Haine, of Bestinvest by Evelyn Partners, said: “The headline interest rate for homeowners with a mortgage may not have changed, but the good news is that mortgage affordability has increased for some.

“Five rate cuts since last summer, a more relaxed lending environment, slower house price growth and strong wage growth have helped ease affordability pressures. But today’s decision to keep interest rates steady, combined with uncertainty about potential property tax increases in the upcoming Budget, could be unsettling for homeowners and potential buyers alike.”

David Hollingworth, deputy director at L&C Mortgages, said: “The improving outlook for rates has already resulted in a lower cost of funds for lenders, with a number of cuts already made to fixed interest rates.

“Most major lenders have reduced interest rates over the last few weeks, which has helped rates fall again.

“This means expected cuts to base rates are already priced into fixed mortgage deals, whereas tracker rates will only react once the base rate has been cut.”

Matt Smith, mortgage expert at Rightmove, said: “In recent days we have begun to see some lenders becoming more competitive in certain segments of the mortgage market and offering headline-grabbing cheaper rates in a bid to secure final business before the end of the year.”

According to figures from UK Finance, 1.6 million fixed mortgages were expected to expire in 2025; Most of these will have already sold out, with another 1.8 million deals scheduled to expire in 2026.

Many mortgage lenders, including Nationwide Building Society, Lloyds and Halifax, launched new rates this week.

HSBC UK also this week announced the introduction of a new maximum mortgage loan-to-income ratio (LTI) of up to 6.5 times annual income for Premier customers.

To qualify for HSBC Premier, customers must have an annual income of at least £100,000 paid into an HSBC Premier account or have savings or investments of £100,000 or more in the bank.

Lorna Hopes, mortgage expert at chartered accountants Smith & Pinching, said: “Competition between lenders was heating up before today and the fine print behind the Bank’s decision may now highlight the spotlight on the fixed-rate price war.”

Santander UK chief economist Frances Haque said low interchange rates were allowing lenders to reduce mortgage rates, adding: “We hope the market will remain on this positive and upward trend, with moderate house price growth continuing as we approach the end of the year.

“Whether we see a base rate cut before the end of 2025 will depend largely on what comes out of the Budget and whether we see the continuation of recent positive trends in inflation and wage growth in future data.”

Tony Hall, head of business development at Saffron for Intermediaries, said: “If price pressures continue to ease, borrowers may begin to see more options in the coming months.”

OnTheMarket chief executive Jason Tebb said: “The vote was close with rate setters voting to retain rates by a majority of five to four.

“Whilst this is disappointing news for borrowers hoping for a rate cut this time, it could mean the next cut is not too far away.”

The average two-year fixed mortgage rate in the market fell to 4.94% at the beginning of November 2025, from 5.39% the previous year, according to moneyfactscompare.co.uk.

The average five-year fixed-rate mortgage rate fell to 5.01% at the beginning of November 2025, down from 5.09% the previous year.

The typical standard variable rate (SVR) that borrowers could find themselves with when their initial deal expires has fallen to 7.27% at the start of November 2025, down from 7.95% the previous year.

Frances McDonald, research director at Savills, said: “Although the pace of rate cuts may be slower than expected, they will still play an important role in stimulating demand and supporting house price growth over the next five years.

“Combined with more relaxed mortgage rules allowing some buyers to borrow a greater multiple of their income and a materially stronger UK economy beyond 2026, we expect upward pressure on house prices to increase again.

“Our latest forecast sees average house prices in the UK rising by 22.2% by 2030, with annual growth peaking at 5.0% in 2028 and 5.5% in 2029.”

Amy Reynolds, sales director at London-based estate agent Antony Roberts, said: “Although many people had talked about a market where not much was going on, which meant we expected a very quiet November ahead of the Budget, this was not the case. We agreed a number of sales (mostly detached houses) with prices reaching up to £2.5 million.”

Reena Sewraz, Which One? The Retail and Money Editor said now could be a good time for savers to shop, adding: “Many digital banks and building societies are now offering much more competitive rates than those on the high street.

“If you’re prepared to put your money away for longer, now might also be a good time to consider a fixed-rate savings bond to lock in a good rate, as it’s possible the Bank of England could cut interest rates at its next meeting.”

Savers have seen rates slide downwards over the past year.

The average easy-access savings account on the market paid 2.52% at the beginning of November, Moneyfacts says; This rate was 3.03% compared to the previous year.

The average amount of easily accessible cash Isa paid fell to 2.71 per cent at the beginning of November; This figure was lower than 3.24 percent in the same period the previous year. Moneyfacts’ savings rate analysis was based on someone having £10,000 to save.

Moneyfactscompare.co.uk financial expert Rachel Springall said: “Frustrated savers tired of seeing their cash eroded by inflation may be more inclined to open a fixed-rate bond or Isa, with many paying guaranteed returns of 4% or more.

“Finding the best rates and taking the time to switch is crucial to making your cash work harder.”