Should I fix my mortgage?

Key takeaways

• Fixed rate mortgages guarantee that the interest rate – and your monthly mortgage payments – will not change for a set period.

• If you have a fixed rate mortgage and the Bank of England base rate goes up, your payments won’t be affected.

• Fixed rate mortgages are normally for two, three, five or 10 years.

• It’s normally best to remortgage when a fixed rate comes to an end.

Should I fix my mortgage now?

Whether you should fix your mortgage depends on several factors relating to both your personal circumstances and the wider economy.

You should consider fixing your mortgage if you:

• Are currently paying your lender’s standard variable rate (SVR)

• Are coming to the end of an existing fixed rate and will face a jump in payments when you are moved to your lender’s SVR

• Think interest rates will go up over the next couple of years and want to lock in a good rate now

• Want to know what your mortgage payments will be for a set period of time

• Will continue to live in your home for the duration of the fixed rate

• Don’t plan to take out any further borrowing against your home in the near future

What is the Bank of England base rate?

The base rate is the interest rate at which commercial banks borrow money from the central bank (i.e. the Bank of England in the UK). The base rate (or ‘bank rate’) influences both mortgage costs and the return on savings.

When the base rate increases, both mortgage and savings rates usually go up. So, this will be bad news for mortgage borrowers who will pay more, but good news if you have savings, as your savings will earn more in interest.

Read more about the base rate.

Is the base rate high at the moment?

As of 24 June 2025, the Bank of England base rate stands at 4.25%¹. The bank’s Monetary Policy Committee reduced the base rate from 4.5% to 4.25% in May 2025, then held it at this rate at the committee’s June meeting.

The base rate was higher two years ago, hitting a recent peak of 5.25% in August 2023.

The base rate was at historic lows from 2009 to 2022. It was reduced to 0.1% in March 2020 in response to Covid lockdowns, and stayed at the same level until December 2021.

So, it may seem like a base rate of 4.25% is relatively high – but looking back over the past 40 years or so, it has been much higher. It stood at around 14 or 15% in the early 1980s, and was in double figures constantly between July 1988 and May 1992.

How does the base rate affect mortgages?

If you have a variable rate mortgage, or are on your lender’s standard variable rate (SVR), changes to the base rate will affect your monthly payments.

Each individual lender’s SVR will be influenced by the base rate, but the rate is not directly tied to it. Lenders usually change their SVR in response to a base rate move – but they’re not obliged to.

A discounted variable-rate mortgage tracks the mortgage lender’s SVR. This means that, if the SVR goes up or down, so does your mortgage interest rate.

A tracker mortgage is a type of variable rate that directly tracks the base rate (e.g. base rate +1%). With a tracker mortgage your monthly repayments will rise or fall in line with base rate changes. So, if the base rate goes up by 0.25%, your mortgage rate will increase by 0.25%. If it falls by 0.25%, your mortgage rate will fall by 0.25%.

You can monitor how base rate changes will affect your mortgage repayments by using our base rate calculator.

If you have a fixed rate mortgage you won’t be affected immediately by base rate changes. This is because your mortgage rate will be locked in for a set period (e.g. 2, 3, 5, or 10 years).

But after the fixed period ends, you will usually be moved to your lender's SVR, which will be affected by the base rate. And if you want to take out a new fixed rate mortgage, the rates available will be impacted by the base rate.

Why are fixed rate mortgages popular?

Fixing your mortgage is the most common approach for first-time buyers, those moving home and people looking to remortgage.

According to UK Finance figures from Q1 2025², 85% of outstanding mortgages in England are on fixed rates, with just 15% on variable rates.

In general, locking into a fix can be a good move if interest rates are likely to rise in the next couple of years. But a variable rate can be better if the base rate is predicted to fall.

Borrowers tend to prefer fixed rates over variable rates because:

• They offer protection from rising interest rates for the duration of the fixed rate

• Budgeting is easier as borrowers will know exactly how much their monthly payments will be during the fixed period

However, the downsides of fixed rates are:

• You might end up paying more than is necessary for your mortgage if mortgage rates fall.

• You’ll be locked in for the duration of the fixed and could be charged early repayment fees if you want to remortgage or sell your home during the fixed period.

Are interest rates likely to go down in 2025?

Yes, interest rates are expected to continue to fall in 2025, but the timing and pace of these cuts is uncertain.

Various economic factors and global events – such as trade wars and geopolitical tensions – will affect exactly if/when cuts are made.

Various forecasters have made differing predictions for the base rate in 2025 – and beyond. The general consensus is that the base rate is likely to fall to 3.75% by the end of 2025.

Capital Economics³ predicts that the base rate could be as low as 3% by early 2026, while Oxford Economics⁴ forecasts further falls to 2.5% by 2027.

To find out more about mortgage rates in 2025 read our guide here.

Is it better to fix for two or five years?

Fixing for two or five years comes down to your personal and financial circumstances, risk tolerance, and expectations for interest rates.

Two-year fixed rates are currently a bit cheaper than five-year fixed rates, but not by much.

Five-year deals can often be more affordable in the longer term as you won’t incur remortgaging costs (mortgage arrangement and valuation fees) so often. These fees can often add up to £1,000 or more – while researching and switching to a new mortgage can also be quite time-consuming.

You should choose a two-year fixed rate if you:

1. Think interest rates will fall – but not for a couple of years

2. Are worried that interest rates will rise in the next 2 years

3. Are planning to move house in the next few years

4. Don’t mind going through the remortgage process again in two years’ time

You should choose a five-year fixed rate if you:

1. Want certainty about your monthly payments for longer

2. Are worried rates won’t fall as predicted or might rise again

3. Plan to stay in your home for the next five years

4. Want to avoid remortgage fees again in two years’ time

A five-year fixed rate also gives you more time to build up equity in your home. With a repayment mortgage, you repay some of your mortgage debt each month. You can boost this by making overpayments, either as a lump sum or monthly. If house prices rise in your area, you might be eligible for cheaper mortgage rates in five years’ time as you will have a lower loan-to-value (LTV).

Before committing to a fixed rate mortgage, check the early repayment charges. These normally apply for the duration of the fixed rate and can mean paying off your mortgage early, remortgaging, or moving house can incur a hefty fee.

Your home may be repossessed if you do not keep up repayments on your mortgage.

References

¹Bank Rate history and data | Bank of England Database

²England Mortgage Factsheet Public.pdf

³ BOE Watch: Risks shifting towards UK rates being cut below 3.50% | Capital Economics

⁴ Interest rates could be 2.5% by late 2027, economist predicts: What would that mean for mortgages? | This is Money