With headlines constantly talking about interest rate rises and falls, it’s natural to feel overwhelmed, especially if your current mortgage deal is nearing its end. The good news? While predictions aren’t set in stone, understanding the landscape and taking proactive steps can empower you to make confident decisions. Let’s break down what current interest rate predictions could mean for you, particularly if you’re looking to remortgage.

 

What’s going on with interest rates?

If you’re navigating the mortgage landscape, you’ll already know that the Bank of England base rate and swap rates are the key indicators to watch, as these measures influence the interest rates lenders offer. We’ve seen some recent shifts, with the Bank of England already making cuts this year (as of May 2025, the base rate stands at 4.25%), and further reductions are expected.

Why does this matter? It’s largely down to inflation and the wider economy. When inflation is high, interest rates are often raised to cool things down. When it’s under control, rates can sometimes ease. For borrowers, this means that the cost of interest on a new mortgage deal can become more (or less) expensive. While the base rate influences variable mortgage rates, fixed rates also depend on swap rates, which have also been on a downward trend, leading to more competitive fixed-rate deals lately.

So, what could this mean for your current mortgage? If your fixed deal is ending soon, or if you’re on a higher standard variable rate (SVR), it may be time to review your options and potentially secure a more competitive rate. Especially if you’re looking to reduce monthly costs or add flexibility to your financial planning.

Fixed vs. variable: Which is right for you?

When you remortgage, one of the biggest decisions is often choosing between a fixed or a variable (tracker) rate. Here’s a look at each, with current rate predictions in mind:

  • Fixed rates:
    • Benefits: If you enjoy stability and want to know exactly what your monthly payments will be, a fixed rate could be right for you, as it makes budgeting easier.
    • The current picture: We’ve seen fixed rates become significantly more competitive in recent months, with some deals now dipping below 4% (as of April 2025). For many coming off much lower rates from years ago, even today’s ‘lower’ fixed rates might seem higher, but they can offer certainty in times of economic shifts.
    • Disadvantages: You won’t benefit if rates drop further, and you might face early repayment charges (ERCs) if you need to switch before your fixed term ends.Disadvantages: Your payments can rise if rates unexpectedly go up, making budgeting less predictable.

 

  • Variable rates (Trackers/SVRs):
    • Benefits: A variable rate, like a tracker, usually follows the Bank of England base rate. So, if the base rate falls further, your monthly payments could drop. They often come with lower or no ERCs, offering more flexibility.
    • The current picture: If you’re currently on your lender’s standard variable rate (SVR), it’s likely much higher (often around 8% or more) than new fixed or tracker deals. Even with predictions of falling rates, an SVR is almost certainly costing you more than it needs to.
    • Disadvantages: Your payments can rise if rates unexpectedly go up, making budgeting less predictable.

Borrowing more? Keep this in mind

Perhaps you’re not just remortgaging, but also dreaming of borrowing a little extra for that loft conversion, an extension, or even a bigger property. While the idea of a dream home is exciting, it’s crucial to understand how interest rates impact your ability to borrow more.

Even small percentage point changes in interest rates can significantly increase your monthly payments when you’re looking at a larger mortgage amount. Lenders will thoroughly assess your affordability, looking at your income, existing debts, and running ‘stress tests’ to ensure you can manage payments even if rates were to rise. The good news is that some lenders are reportedly easing these stress tests slightly, which could potentially increase how much you’re able to borrow – but it’s always dependent on your personal circumstances.

 

Three steps for a smarter mortgage move

  1. Check your credit score: Your credit score significantly affects your borrowing power and the rates you’re offered.
    • Action: Regularly check your credit reports (you can do this for free), correct any errors, and keep on top of payments.
  2. Get your documents ready: No one loves paperwork, but it speeds up the process, especially when you need to act quickly to secure a favourable rate.
    • Action: Gather recent payslips, bank statements, proof of ID and address and current mortgage details. Being digitally organised will save you a headache!
  3. Speak to a broker early: Brokers are your expert guide – they can help you look at your existing deal (including any early repayment charges and your deal end date), and then compare the market – not just a few lenders – to find the right deal for your financial situation (fixed, variable, different lenders). They can also help you understand interest rate predictions in the context of your finances.
    • Action: Don’t wait until the last minute! Many lenders allow you to lock in a new rate up to six months before your current deal ends.

 

While interest rate predictions are useful, the smartest mortgage moves come from preparation and personalised advice. By keeping an eye on your credit score, getting your documents in order, and speaking to a qualified mortgage broker early, you can navigate the market with clarity and secure a deal that works for you.

Ready to explore your mortgage options and see how Moneybox Mortgages brokers can help you make informed decisions?

Your home may be repossessed if you do not keep up repayments on your mortgage.
You may have to pay an early repayment charge to your lender if you remortgage.
Moneybox Mortgages is provided by Moneybox Mortgages Ltd.