UK Fixed Mortgage Rates are once again in the spotlight, and for good reason. After two turbulent years of rising interest rates, soaring inflation, and uncertainty in the housing market, borrowers are finally seeing signs of relief. As of August 2025, fixed mortgage rates have eased to their lowest levels in months, with many lenders offering competitive deals that could save families hundreds of pounds per month.
Why UK Fixed Mortgage Rates Matter Right Now
Why does this matter? Because your mortgage is likely your biggest financial commitment. Even a small shift in the interest rate you pay can mean the difference between comfortably managing your monthly budget and feeling financially stretched. With inflation still higher than expected and the Bank of England base rate holding at 4%, the market has reached a point of cautious stability – making fixed rates increasingly attractive for both new buyers and those looking to remortgage.
This article explores where rates stand right now, why they’re easing, what options borrowers have, and how you can decide whether now is the right time to fix your mortgage deal.
The Current Picture: Average Fixed Mortgage Rates in August 2025
If you’re scanning the market today, here’s what you’ll find:
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Average two-year fixed rates are around 4.49%, a slight dip from earlier this summer.
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Average five-year fixed rates are also sitting at 4.49%, suggesting lenders are pricing in stability for the medium term.
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For borrowers with strong deposits, the best deals are much lower: around 3.73% on two-year fixes and 3.85% on five-year fixes.
- UK Fixed Mortgage Rates are holding steady at around 4.49% on average, with some lenders offering two and five-year fixed deals as low as 3.73% and 3.85%, giving homeowners and buyers fresh opportunities to secure lower borrowing costs.
Let’s put that into context. Just over a year ago, average two-year fixed rates were nudging above 6% following a period of economic turbulence. Today’s rates, while not at the ultra-low levels seen in the 2010s, are far more manageable and give borrowers confidence that the worst of the mortgage squeeze may be behind us.
For first-time buyers, the picture is improving but still challenging. If you’re putting down a smaller deposit (say 10%), you can expect higher rates in the 4.3–4.6% range. For those remortgaging with more equity (25% or more), the rates are much more favourable, closer to 3.9–4.1%.
The key takeaway? Fixed mortgage rates have steadied, giving borrowers a much-needed breathing space.
Why Are UK Fixed Mortgage Rates Easing Now?
It’s natural to wonder: if inflation is still stubbornly high at 3.8%, why aren’t mortgage rates climbing? The answer lies in expectations and lender competition.
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Bank of England’s Base Rate Holding at 4%
The Bank of England has kept its base rate steady rather than pushing it higher. This signals to lenders that interest rate hikes are less likely in the near term, reducing pressure on mortgage pricing. -
Market Confidence Returning
Lenders are more willing to compete for borrowers again. This renewed confidence is translating into slightly better deals as banks and building societies jostle for market share. -
Economic Outlook Stabilising
While inflation is above target, energy prices and wage growth suggest inflation may ease gradually over the next year. Lenders are factoring this into medium-term pricing, which explains why five-year fixed rates are competitive.
Put simply, fixed rates are easing because the market believes we’re past the peak of uncertainty. Borrowers can now lock in deals without fearing sharp rises just around the corner.
Two-Year vs. Five-Year Fixed Mortgage Rates – Which Is Better?
One of the biggest questions for borrowers is whether to go short-term or long-term with their fixed mortgage. Both options have pros and cons.
Two-Year Fixed Deals
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Pros: Lower rates today (as low as 3.73%). Flexibility to remortgage sooner if rates fall further.
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Cons: Higher uncertainty—you could face a rate shock in just two years if the market changes.
Five-Year Fixed Deals
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Pros: Stability for longer, protecting you from unexpected rate rises. Rates are competitive, starting around 3.85%.
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Cons: Less flexibility—you’re locked in for longer, and if rates drop, you may miss out unless you pay exit fees.
The decision often comes down to personal circumstances. If you value certainty and want predictable payments, a five-year deal is attractive. If you’re willing to take a bit of risk in the hope that rates will fall further, a two-year fix may make sense.
The Role of Deposit Size and Loan-to-Value Ratios
Not all borrowers are treated equally when it comes to fixed mortgage rates. Your deposit size—or in the case of remortgaging, your equity—plays a huge role in the rates you’re offered.
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60% Loan-to-Value (LTV): Best deals, with rates as low as 3.8–3.9%.
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75% LTV: Competitive but slightly higher, around 4.2–4.3%.
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90% LTV: More expensive, averaging around 4.5–4.6%.
Lenders see higher LTV mortgages as riskier, so they price them higher. This is why saving a larger deposit or building equity through repayments and house price growth can significantly reduce your borrowing costs.
For first-time buyers, this creates a challenge. Many are already struggling to save deposits in the face of high rents and living costs. But even a small jump in deposit size—from 10% to 15%—can open the door to noticeably better deals.
Remortgaging – A Window of Opportunity
If your current fixed deal is ending soon, remortgaging has suddenly become more attractive. The average two-year fixed rate has dipped below 5%, giving homeowners a chance to avoid the punishing standard variable rates (SVRs) that hover closer to 7%.
For example:
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A borrower with a £200,000 mortgage on a 25-year term moving from 6% to 4.3% could save over £200 per month.
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Those with larger mortgages stand to save even more, making remortgaging one of the most effective ways to cut household costs right now.
The message is clear: don’t wait until your current deal ends. Start shopping around 6–9 months before expiry to lock in the best rate.
Conclusion – What Borrowers Should Do Next
The easing of UK Fixed Mortgage Rates in August 2025 is welcome news for anyone buying, remortgaging, or planning ahead. Rates are far from the rock-bottom levels of the past, but compared to the peaks of recent years, they represent a real chance to regain stability in household budgets.
Here’s what to do:
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Shop Around – Don’t just stick with your existing lender; check the whole market.
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Weigh Short vs. Long Fixes – Decide whether flexibility or certainty matters most to you.
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Check Your LTV – Even a slightly larger deposit could unlock a better deal.
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Remortgage Early – Secure a rate before your current deal ends to avoid higher SVRs.
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Seek Advice – A mortgage broker can help navigate the market and find the most suitable deal.
Fixed mortgage rates may not fall dramatically in the months ahead, but they’ve steadied enough to give borrowers confidence again. Now is the time to act strategically.
FAQs
1. What are the current average UK fixed mortgage rates?
Around 4.49% for both two-year and five-year deals, with the best offers starting at 3.7–3.8%.
2. Are mortgage rates likely to fall further in 2025?
Possibly, but with inflation still high, dramatic cuts are unlikely. Rates are expected to remain stable rather than plummet.
3. Is it better to choose a two-year or five-year fix?
Two-year fixes offer flexibility and lower short-term rates, while five-year fixes provide longer stability. It depends on your risk appetite.
4. Can I remortgage before my current deal ends?
Yes. Many lenders allow you to secure a new deal up to 6–9 months before your current fix expires.
5. Do first-time buyers get higher mortgage rates?
Yes, usually. Smaller deposits mean higher loan-to-value ratios, which lenders consider riskier, leading to higher fixed rates.