With the Bank of England recently reducing the base rate by 25 basis points to 4.25 percent, property investors across the UK are asking the same question: Is now the time to fix my mortgage, or should I wait for further cuts?
Whether you are a seasoned investor or just stepping into the buy-to-let market, understanding what these changes mean for your mortgage, cash flow, and long-term returns is crucial.
Note: This article is adapted from a conversation originally featured on the APW Market Wrap video series
Falling Rates: A New Phase for the UK Economy
This latest interest rate cut marks the first in the current cycle and signals a potential shift in monetary policy. With inflation cooling, March CPI fell to 2.6 percent from 2.8 percent. Analysts believe more cuts may be on the horizon.
Oxford Economics projects the base rate to fall to 3.75 percent by the end of 2025 and potentially to 2.5 percent by 2028. Morgan Stanley is even more bullish, suggesting there could be five more cuts ahead, bringing the base rate down to 3 percent.
Data sourced from Morgan Stanley and Oxford Economics, as of May 2025.
What Does This Mean for Mortgage Products?
As lenders anticipate further rate reductions, we are already seeing sub-4 percent mortgage deals appear on the market. Lloyds Bank, for example, is offering a 3.72 percent rate for borrowers with a 40 percent deposit. While not all investors can meet such low loan-to-value (LTV) requirements, the trend indicates increasing competition among lenders and better deals for borrowers.
It is worth noting that about a third of UK property owners have no mortgage at all, and another third have less than 50 percent borrowing. For those who can afford to increase their deposits, better rates and improved long-term flexibility may be within reach.
Should You Fix Your Mortgage Now?
The answer depends on your investment strategy and risk tolerance. Fixing your mortgage now could secure you a competitive rate and provide certainty over your repayments, which is particularly valuable for those looking to manage cash flow over a five-year horizon.
However, with further rate cuts likely, a variable or tracker mortgage might offer better value in the short term. The advantage? You benefit from future rate reductions without early repayment charges. The risk? If rates were to climb unexpectedly, your repayments could rise.
As of now, average two-year fixed rates stand at 5.14 percent, with five-year fixes slightly lower at 5.08 percent (according to Moneyfacts). But with rates trending downward and swap rates already pricing in cuts, short-term deals under 4 percent are becoming increasingly common.
Flexibility vs. Certainty: Which Suits Your Strategy?
Shorter-term products offer flexibility, which can be useful if you plan to refinance or adjust your portfolio soon. But they also carry refinancing risk if market conditions worsen or rates unexpectedly rise.
On the other hand, long-term fixes are ideal for those who prioritise predictability. Knowing exactly what your mortgage payments will be over the next five years allows you to budget accurately and plan your portfolio growth more effectively.
Rents Are Still Rising – But Not Everywhere
While London’s rental growth has stabilised, many areas across the UK are still seeing upward pressure on rents. This means your rental income could continue to improve even as mortgage costs fall — a potentially lucrative combination for investors.
Lenders often allow you to lock in a rate up to six months in advance. Even if rates improve during that time, you can usually switch to a better deal before completion without penalty. Given how quickly the market is changing, securing a deal now gives you options and peace of mind.
What’s on the cards for mortgage borrowers?
We are entering a more favourable climate for borrowers, but that does not mean rushing into the first available deal. The right decision will depend on your deposit size, risk appetite, portfolio goals, and the timing of your next purchase or refinance.
If you are in the market now or expect to remortgage in the next six months, it is wise to start exploring your options. With rates likely to continue falling and rental yields remaining robust in many regions, 2025 could be a strong year for strategic property investment.
With the UK property market showing steady growth and company structures offering valuable tax advantages, now could be a smart time to take action. Whether you’re making your first investment or expanding an existing portfolio, the right knowledge can make all the difference. Download our free guide – 10 Steps to Smarter Property Investing – and share this article with anyone else focused on building long-term wealth with confidence.
With 32 years’ experience in UK property investment, Stuart helps expatriates worldwide source and manage high-yield properties with ease and confidence. As founder of APW, he delivers a seamless, end-to-end service—from financing to management—removing stress and ensuring clarity at every step. Whether it’s buy-to-let, HMOs, student or holiday properties, Stuart prioritises profitability, tax efficiency, and long-term peace of mind.