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How low could fixed rates go?

ended 16. September 2024

Sounds like a song out of Grease, but how low could fixed rates go? A journalist at the Daily Mirror is after quick views on whether, with all the talk of central banks easing globally, a sub-3% fixed rate could appear in 2025. Is that possible? Be quick.

15 responses from the Newspage community

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Harps Garcha
Director at Brooklyns Financial
Fixed mortgage rates could potentially drop below 3%, as we’re already seeing rates dip below 4% in 2024. However, with Labour’s economic policy potentially playing a major role in shaping the financial landscape in 2025, the market's future remains uncertain.
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Katy Eatenton
Mortgage & Protection Specialist at Eatenton Finance
I think 3.5% will be the lowest fixed rate we’ll see in 2025, and that will be at the end of the year. But the base rate could feasibly be 4.5% by the beginning of the year.
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Riz Malik
Independent Financial Adviser at R3 Wealth
If the rate-cutting cycle by the US is aggressive and the UK and Europe follow, it is possible to see a 5-year fix of just under 3% towards the end of 2025 especially if inflation is kept at bay. Even if that doesn't happen, the cuts ahead should be enough to reinvigorate the market and put the devastation of Truss's mini-Budget firmly in the rear view mirror.
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Simon Bridgland
Director at Charwin Private Clients
The markets can always deliver a curveball, but a mortgage rate close to sub-3% is very much possible by the end of next year. Given the market leading rates we currently have and how we are placed as an economy, I don't see it as being far-fetched anymore. However, don't expect to get anywhere near the ultra-low rates we all enjoyed a few years ago, as that ship has long sailed with only one-way tickets.
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Hannah Bashford
Director at Model Financial Solutions
I think rates under 3% in 2025 are wishful thinking but fixed rates around the 3.2%-3.5% mark by the end of next year are realistic given current economic conditions.
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Darryl Dhoffer
Founder at The Mortgage Geezer
While a sub-3% fixed rate in 2025 is not impossible, it seems unlikely given the current economic landscape. The more probable scenario is a gradual decline in rates, with a fixed rate around 3.5% being a more realistic target for the end of next year.
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Gabriel McKeown
Head of Macroeconomics at Sad Rabbit - Substack Newsletter
As interest rates continue their downward dance, a mad dash to rock-bottom rates has begun, however this could be just the beginning of a larger downward trend. With a critical BoE policy decision on Thursday, this trend of rate cuts should help to keep the momentum rolling on towards the end of 2024 and beyond. Furthermore, despite economic headwinds, a gradual loosening of lending conditions globally is highly likely as we approach the end of 2024, and the beginning of 2025. Of course there is someway to go, however, you may no longer need a time machine to see mortgage rates beginning with a 2.
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Ben Perks
Managing Director at Orchard Financial Advisers
A sub-3% interest rate would be like a dream come true in 2025 and it's not completely outside the realms of possibility. Any rates beginning with a 2 would be reserved for low loan-to-values and longer fixed terms. We should see more sub-4% rates and I think lenders will slow the race to reduce in favour of stability throughout 2025. Ultra-low rates in the region of 1% are long gone and aren't likely to return in many people's mortgage lifetime.
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Emma Jones
Managing Director at Whenthebanksaysno.co.uk
Rates are dropping across the board and have been for some time. Where they go between now and Christmas will depend on all manner of factors, from inflation, the performance of the economy, which is currently flatlining, and the Autumn Budget. Markets are always unpredictable but it does feel like rate cuts have some way to go yet.
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Dariusz Karpowicz
Director at Albion Financial Advice
It’s all heading the right way with lenders cutting rates left and right, some even twice a week. A sub-3% fixed rate isn’t off the table, especially for lower LTVs, and we might even see it before year-end. Barring any major global curveballs, this trend could keep going strong. Fingers crossed the momentum continues.
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David Stirling
Independent Financial Advisor at Mint Wealth
We can but dream of a return to super-cheap fixed rates, but given world events and inter-bank lending rates, it won't be in the next few years. The quiet consensus from some lenders will be rates settling around 3.5% by 2025, and with Santander launching a 3.99% 2-year fix tomorrow, this seems entirely plausible.
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Jack Tutton
Director at SJ Mortgages
With Santander introducing the first sub 4% 2 year fixed rate this week, this will drive more competition and I expect more lenders to follow. There has been wide spread talk of further base rate reductions before the end of the year, this along with lenders wanting to start 2025 strongly could see rates fall sharply. As to how far they come down, mortgage holders will be watching intently with hope of sub 3% products next year.
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Justin Moy
Managing Director at EHF Mortgages
Sub-3% rates will take some seismic change from both the US and Eurozone before we can look at that kind of pricing. For the next 6-12 months we need to see base rate catch up with the fixed-rate pricing, given the huge disparity between those products at the moment, and only then will the base rate to find its new norm in the 3%'s. But as we have seen so many times, what happens in reality may be totally different, as there are so many factors that influence mortgage rates these days. Trying to predict where rates go is like herding cats.
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Iain Swatton
Director at Exemplar Financial Services
There’s a possibility we could see sub-3% fixed rates by 2025—if all the stars align. A drop in the Bank of England base rate, as some analysts predict, combined with fierce competition between lenders, could bring us a sub-3% deal. It’s an exciting prospect for borrowers and could signal a major shift in the mortgage market.
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Patricia McGirr
Founder at Repossession Rescue Network
Sub-3% fixed rates sounds like a dream come true, but let’s not pop the Prosecco just yet! With inflation still rearing its ugly head and the U.K. economy all over the place, rates won’t just go down like a Friday night kebab. If we do see them dip, it'll be because central banks are pulling out all the stops or lenders are fighting tooth and nail for your business. So, yes, stay hopeful, but don’t start planning your ‘Mortgage-Free’ party for 2025 just yet. Like your drinks, get your financial ducks lined up and plan ahead.