There are signs that a fresh mortgage price war could be emerging as lenders across the UK announce a wave of cuts to their fixed-rate deals in recent days. Borrowers are now beginning to see the early signs of rate reductions, with sub-4.5% mortgage products becoming increasingly available following a period of heightened market volatility.
While the Bank of England (BoE) voted to hold the base rate at 3.75% last week, an improving global outlook and easing wholesale funding costs have given lenders the confidence to trim rates and compete more aggressively for new business.
Why are mortgage rates falling?
The recent drop in mortgage rates is primarily being driven by a reduction in swap rates, which are the wholesale rates financial institutions pay to fund the mortgages they issue. Swap rates are highly sensitive to global economic and geopolitical developments. The announcement of the US-Iran peace deal on 15th June removed a significant amount of uncertainty from the global economy, contributing to a downward shift in these wholesale costs and creating room for lenders to reduce their pricing.
The chart below illustrates what the drop in swap rates means for the market's expectation of where the Bank of England base rate will be over the next five years. The purple line represents the latest prediction, with the market now pricing in just one rate hike later this year. Just a few weeks ago, the market was pricing in two to three hikes in 2026 as shown by the other coloured lines. Each line shows the market predictions made in the past, on the dates stated.
Notice how the current market prediction (the purple line) remains much higher than the prediction made before the war started (the green line), despite the peace deal. Nonetheless, you can see the impact that the peace deal has had on rate expectations by observing the difference between the purple and blue lines over the short-term.
Other contributing factors in recent days include the Bank of England's Monetary Policy Committee (MPC) voting to maintain the base rate at 3.75%, while UK inflation held steady at 2.8%. Both further reassured the market, paving the way for lenders to engage in targeted price cuts.
How much have mortgage rates dropped?
The mortgage market has seen significant repricing in recent days, with a number of major high street banks and building societies trimming their fixed-rate ranges. This includes the likes of NatWest, Barclays, Santander, Halifax, Coventry Building Society and TSB.
The table below compares the best fixed mortgage rates available just prior to the announcement of the US-Iran peace deal, the recent UK inflation data and BoE rate decision, versus the current best fixed-rate mortgage deals.
The biggest rate cuts have occurred on the highest loan-to-value (LTV) two-year fixed deals, with much smaller rate cuts being made on 5-year fixed-rate mortgages. This is likely because short-term swap rates have fallen more significantly than longer-term rates as shown in the chart above; in fact, longer term rate expectations remain largely unchanged.
2-year fixed-rate mortgages
| Loan-to-value (LTV) | Best rate 6th June | Best rate 22nd June | Fall |
| 60% LTV | 4.37% | 4.30% | -0.07% |
| 80% LTV | 4.61% | 4.32% | -0.29% |
| 90% LTV | 4.80% | 4.32% | -0.48% |
5-year fixed-rate mortgages
| Deal | Best rate 6th June | Best rate 22nd June | Fall |
| 60% LTV | 4.40% | 4.33% | -0.07% |
| 80% LTV | 4.64% | 4.57% | -0.07% |
| 90% LTV | 4.75% | 4.58% | -0.17% |
The fact that we've already seen rate cuts on short-term fixed-rate mortgage deals is positive news for borrowers, however, there remains uncertainty around the economic outlook in the UK and the fragility of the US-Iran peace deal. For now, lenders are making targeted rate cuts, but if confidence increases then the frequency and scale of the mortgage rate cuts will likely increase.
How to secure the best mortgage deals
There is no certainty that there will be a dramatic, sudden drop in mortgage rates, but the recent falls present a window of opportunity for those looking to secure a new deal. We provide a roundup of the best mortgage deals which is regularly updated.
The best way to find the right mortgage deal is by speaking with a mortgage broker who can search the market for the best rates tailored to your specific needs. If you are moving home or buying your first home, you can typically lock in a rate for up to three months before completing the purchase. During this time, you can ask your mortgage broker to keep you abreast of any better deals that transpire. Similarly, those looking to remortgage can lock in a rate with their current lender by submitting a simple product transfer application up to six months prior to the expiration date of the existing mortgage deal. It is, however, sensible to use the services of a mortgage broker to search the market for the best remortgage deals, as switching lenders could give you access to a better rate elsewhere.
If you do not have a mortgage broker, you can source one in your local area using the online directory for financial professionals, Vouchedfor*. Mortgage brokers are listed according to their services, alongside reviews from other mortgage customers. If you would prefer to consult a mortgage broker online or over the phone, you can contact Habito*. This leading online mortgage brokerage searches over 90 lenders’ mortgage deals on your behalf. Habito’s mortgage advisers make recommendations based on your circumstances and preferences, while their teams assist with the application process needed to secure your mortgage deal. Habito does not charge for its mortgage advice and guidance and is instead paid by the lender if you complete a mortgage using its services.
If a link has an * beside it this means that it is an affiliated link. If you go via the link, Money to the Masses may receive a small fee which helps keep Money to the Masses free to use. The following link can be used if you do not wish to help Money to the Masses or take advantage of any exclusive offers - Habito, Vouchedfor
MTTM AI (beta) 
