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With the Bank of England Base Rate still going up, it looks odd to see mortgage rates coming down when logic dictates that they should be following the Base Rate. Yet as the Bank of England raised interest rates by 0.5% to 4% on the 2nd of February, a lender had just announced a five-year fixed rate mortgage at 3.95% for five years1.

Please note that where Rates are referred to in this article, they may be subject to further criteria or an assessment of your finances before applying and may not be available after this article is published.

One of the main reasons behind the Base Rate increases has been the Bank of England seeking to counter inflation.. The Bank of England hopes that higher rates will slow economic activity, which in turn will reduce prices and lower the rate of inflation2. For those of us with mortgages on variable or tracker rates, it means that the monthly cost of our mortgages will go up, while those on fixed rates are shielded from any immediate change in monthly repayments. However, when their fixed rate periods end, it is likely that refinancing to an equivalent fixed rate will be difficult to emulate, depending on when the mortgage was taken out and refinancing could cost more.

Market analysts forecast that mortgage rates and borrowing costs will start to soften and fall during the year, even though Bank Rates may peak at 4.5% later this year. Some even forecast that Rates will stay above 3.25% for the next three years, despite inflation starting to dip3, yet this can be hard to predict.

Part of the reason for the reduction in mortgage rates seen already is that lenders have already factored in Bank Rate rises to their calculations, and that some lenders are keen to encourage buyers back to the housing market, or assist those looking for the certainty of a fixed rate mortgage at a time of volatility. Competition is high and we are likely to see further lenders looking to compete by lowering their fixed rates.

According to figures from the Office of National Statistics, 57% of mortgages coming up for renewal in 2023 were originally at rates of below 2%, which means that many householders should prepare for the difference when looking to remortgage now. The Office of National Statistics believes that the average rise in mortgage repayments will be around £250 more per month, whilst a £300,000 mortgage may see the repayments rise by as much as £661 per month4.

Though the figures can look intimidating, this is a trend that we have seen recently in the market, and so should not come as too much of a shock. If you wish to discuss your mortgage circumstances – contact us today to see how we can help.

If you are struggling to keep up on your mortgage payments, please contact your lender in the first instance or use the services of free, not-for-profit advice services such as MoneyHelper or StepChange.

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


1.            IFA Magazine (2023) Virgin Launches a 5-year fixed rate at 3.95% – reaction. Available at: [Accessed 21Feb 2023].

2.            Bank of England (2023) Why have interest rates in the UK gone up?. Available at: [Accessed 21 Feb 2023].

3.            iNews (2023) When will mortgage rates go down? How recent interest rates affect lenders and when mortgages could change. Available at: [Accessed 21 Feb 2023]

4.            Office of National Statistics (2023) How increases in housing costs impact households. Available at: [Accessed 21 Feb 2023].

All the information in this article is correct as of the publish date 23rd February 2023. The opinions expressed in this publication are those of the authors. The information provided in this article, including text, graphics and images does not, and is not intended to, substitute advice; instead, all information, content and materials available in this article are for general informational purposes only. Information in this article may not constitute the most up-to-date legal or other information.

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