Great news if you've been waiting to start your property search in London - mortgage rates have dropped below 4%. Lenders are feeling confident, which means there are some excellent mortgage deals available right now. Here's what you need to know...
What's changed?
The Bank of England recently lowered the Base Rate, which is usually good news. However, this time around, the excitement was muted because they also pulled back on their predictions for economic growth in 2025.
Despite this cautious outlook from the Bank of England, we're happy to report that the property market remains positive. In fact, some mortgage lenders are offering some of their best rates in months, and even years. This positive shift in lender confidence is a welcome development.
"Rates below 4% are a hugely positive step for consumers and the market. When mortgage rates start with a 3 it helps to break a psychological barrier and we have seen this positive sentiment from our clients."
"With the outlook of further base rate cuts this may lead to lenders offering lower affordability stress rates, which could give a bit more flexibility with affordability for those looking at their buying or remortgage options. Naturally anyone reviewing their mortgage options will need to speak to a good broker to access the most appropriate option."
Stephanie Daley
Director of Partnerships - Alexander Hall
Can I get a mortgage rate under 4% now?
Our partner broker, Alexander Hall, tells us that there are both 5-year and 2-year fixed rate products below 4% once again. While we saw some 5-year fixed deals below 4% last year, this is the first time since March 2023 that 2-year fixed rates have been this low.
This means you could get a mortgage with lower monthly payments than you might have expected. Alexander Hall works with both high street banks and specialist lenders to find the right mortgage for you.
What does this mean for my monthly payments?
All this fuss over less than a 1% decrease? You'd be surprised; a small change in your mortgage rate can actually make a huge difference to your monthly payments. Even a quarter of a percent (0.25%) drop could save you hundreds of pounds each year:
The Impact of a 0.25% Rate Drop
See How Much You Could Save Monthly
Based on a 30-year repayment mortgage term
Should I go for it?
Fixed or variable rate?
Many people who bought through us when rates dipped this time last year are now happily settled in their new homes with 2-year or 5-year fixed rates. However, no one can perfectly time the market to get the lowest possible rate.
As we said last year: "Rates might come down a bit more, or they might not. Is waiting for a possible better deal worth missing out on what's available now? Only you, your adviser and time will tell."
What to consider
If you're thinking of getting a fixed-rate mortgage, here are a few things to consider:
• If you’re moving from a variable rate, first check if there's an exit fee
• First-time buyer? Look carefully at any product or arrangement fees
• A 5-year fixed rate will give you peace of mind on your monthly payments, however we may see rates fall further over the coming years. In which case, a shorter-term deal could give you the flexibility to switch in 2-3 years.
Ready to Explore Your Options?
Whether you want to move forward now or just see what's possible, start by talking to a mortgage adviser. They'll keep track of the market for you, explain your options clearly, and help you make the right choice for you. Get in touch with Alexander Hall, our trusted mortgage partners, for a free consultation.
Want to start looking at properties? Find your local office, browse our homes on the market or tell us what you’re looking for on My Foxtons, and our local experts will help you find it.
Source: This information for this article was provided by and reviewed by Alexander Hall mortgage advisers, to ensure you have the most valuable information in front of you when you’re navigating the mortgage market. If you have any questions on the blog information, get in touch. We’re always happy to help.
