Quick Summary
- Budget 2025 reinforces expectations of falling mortgage rates through lower inflation, calmer markets and supportive economic forecasts.
- Fixed rates should continue drifting down, especially 5-year deals.
- Trackers already dropped with the latest Bank Rate cut, and more cuts remain possible through the year.
- Affordability should improve as stress tests ease and household costs fall.
- Best window for buyers/remortgagers in years — but timing depends on your circumstances.
1 | Why Budget 2025 Strengthens the Case for Lower Rates
The Budget doesn’t set mortgage rates directly — but it shapes the economic environment that lenders price from.
✔ Lower inflation forecasts
Markets love stability, and lower inflation expectations reduce the cost of funds that lenders use to price fixed rates.
✔ Stronger wage growth
Higher real wages help borrowers pass affordability tests more easily, and lenders may relax stress rates a touch.
✔ Stable housing market outlook
No major tax surprises. No Stamp Duty changes.
This gives lenders confidence — and confident lenders = more competitive pricing.
2 | So… Will Mortgage Rates Actually Drop?
Short answer: Probably yes — but gradually, not suddenly.
📉 5-year fixes
These continue to lead the charge. Expect further improvements of:
- 0.10% – 0.25% over the next 6–12 weeks
- Strongest reductions at 60% and 75% LTV
📉 2-year fixes
More sensitive to Bank of England base rate.
If another rate cut lands this year, expect a noticeable improvement.
📉 Trackers
Already moving — the latest Bank Rate drop feeds straight into next payments.
If the Bank cuts again, trackers drop again.
3 | How the Budget Helps First-Time Buyers
First-time buyers tend to gain the most from falling rates because every percent matters when you’re borrowing at 90% or 95% LTV.
Budget 2025 supports them through:
- Lower living costs → better lender affordability
- More new homes → stabilised pricing
- Easier saving due to lower inflation
This indirectly boosts confidence and mortgage eligibility.
4 | How Remortgagers Are Affected
If your fix ends in 2025 or early 2026:
👍 Good news
- Product-transfer deals from mainstream banks will likely fall again soon.
- You may secure a lower rate now and re-book if rates drop further before completion.
🤔 Watch-outs
- Some lenders are tightening on credit conduct.
- If your loan-to-value is high due to recent price dips, you may not qualify for the headline rates.
Get a broker to compare lender vs new-lender options — the gap between them is widening.
5 | Should You Wait or Lock In Now?
Reasons to lock now:
- Your fixed deal ends within 6 months
- You want payment certainty
- You’re worried about volatility
Reasons to wait (a little):
- You’re not under pressure to complete
- You’re currently saving for a bigger deposit
- You want to see if the Bank cuts again
The most popular strategy right now is:
👉 Lock a deal now, then switch to a cheaper one if rates drop before completion.
Most lenders (quietly) allow this.
6 | The Bottom Line
Budget 2025 didn’t bring flashy housing giveaways — but it did reinforce the direction of travel:
➜ Lower inflation
➜ Calmer markets
➜ Falling fixed-rate funding costs
➜ More lender competition
Put simply: yes, rates are likely to continue falling, and the current market is the most buyer-friendly since 2021.
📞 Want a Personalised Rate Check?
We don’t provide advice directly — but we can introduce you to a specialist adviser who can:
- Compare today’s best deals
- Forecast how low rates could go for your situation
- Secure a rate now and monitor for falls
- Provide a no-obligation remortgage or first-time buyer review