By clicking a retailer link you consent to third-party cookies that track your onward journey. This enables W? to receive an affiliate commission if you make a purchase, which supports our mission to be the UK's consumer champion.
Sam covers personal finance topics, from the best savings rates to the reasons mortgage lenders say no. He enjoys crunching the numbers to help consumers get ahead.
More than five million households are projected to see their mortgage repayments increase by the end of 2028, according to the Bank of England.
In fact, it projects that the typical owner-occupier mortgagor rolling off a fixed rate in the next two years will find their monthly mortgage repayments increase by £45.
With so many borrowers facing the prospect of higher monthly repayments, recent rate cuts are especially welcome. But will it continue?
Here, Which? explains what's happening in the mortgage market, how it will impact your monthly repayments and whether more rate cuts are on the way.
Find the right mortgage using the fee-free service provided by L&C Mortgages
Compare mortgagesIf you click on the link and complete a mortgage with L&C Mortgages, L&C is paid a commission by the lender and will share part of this fee with Which? Ltd helping fund our not-for-profit mission. We do not allow this relationship to affect our editorial independence. Your home or property may be repossessed if you do not keep up repayments on your mortgage.
Since the last week of June, all 10 of the largest lenders in the UK have cut rates.
Experts say the downward trend has been prompted by falls in swap rates – a key part of the cost of lending for mortgage providers. These can move sharply in response to global and domestic events.
As a result, the best rates for fixed rates are now around 4.3%. By comparison, at the end of May, the market-leading fixed rates were around 4.6%.
The best fixed-rate deals are offered to borrowers who own at least 40% of their home. The best rates for first-time buyers with a 10% deposit are currently around 4.6%.
Tracker mortgages continue to offer the lowest mortgage rates. When we checked on 13 July, there were 18 sub-4% tracker mortgages. No other mortgage type offers a rate that begins with a three.
If you're considering a tracker mortgage, ensure you're comfortable with the risk that your rate could increase if the Bank of England base rate rises.
To show how a reduction of 0.5 or 0.2 percentage points could affect your monthly mortgage payments, we've set out two scenarios in the table.
For each scenario, we show the monthly repayments at four interest rates: 5%, 4.5%, 4.2% and 4%.
| Scenario | Loan amount | Mortgage term remaining | Monthly repayment 5% | Monthly repayment 4.5% | Monthly repayment 4.2% | Monthly repayment 4% |
|---|---|---|---|---|---|---|
| 1 | £250,000 | 25 | £1,461 | £1,390 | £1,347 | £1,319 |
| 2 | £200,000 | 15 | £1,582 | £1,530 | £1,500 | £1,479 |
Monthly repayment figures rounded to the nearest pound.
For both scenarios, a fall in rate from 4.2% to 4% equates to savings of more than £250 on your mortgage payments over a year.
In scenario one, a fall in interest rates from 4.5% to 4% results in savings of £852 over 12 months.
If you're hoping mortgage rates will continue to fall, you may need to temper your expectations.
Nicholas Mendes, from mortgage brokers John Charcol, told Which? that the recent run of cuts has 'likely come to an end, at least for now'.
One reason is renewed conflict in the Middle East. Rising oil prices have pushed up the cost of funding fixed-rate mortgages, making it more expensive for lenders to offer cheaper deals. It's another reminder that mortgage rates can be affected by events happening around the world, not just changes to the Bank of England base rate.
Mendes says rates could start falling again if tensions ease, but any reductions are likely to be gradual. However, if the conflict escalates or drags on, he warns, 'the direction of travel is up, not down'.
If your current mortgage deal is ending soon, Mendes says it may not be worth waiting in the hope of lower rates. Many lenders let you secure a deal now and switch to a cheaper one before completion if rates fall, giving you some protection if borrowing costs rise in the meantime.
When searching for a mortgage, getting a competitive rate is very important.
But this isn't the only figure to focus on. Deals with market-leading rates can sometimes have substantial upfront fees.
As a result, we have seen fee-free deals with slightly higher rates that are more cost-effective than deals with the best overall rate. This is why it's so important to consider the cost of the entire mortgage deal.
You can use the Which? mortgage repayment calculator to compare two similar deals. It can tell you the monthly repayment and the total cost of the loan, whether you include the fee or not.
If it's your first time taking out a mortgage, you may also want to get help from a mortgage broker.
A whole-of-market mortgage broker can search for a deal that suits your specific circumstances and ensure that you get the best value for money when taking into account the headline rate, along with any fees.
Also, make sure to check who ranks at the top in our table of the best mortgage lenders before choosing a deal. We have review pages for more than 20 lenders, with feedback from real customers.
