How has the latest Bank Rate impacted mortgages?

Back in 2023, we investigated whether mortgage rates were likely to decrease anytime soon. At the time, the outlook was fairly gloomy - fixed rates were at 12-year highs and homeowners were bracing themselves for steeper repayments. Two years on, the picture looks a little different.

The Bank of England has now cut its base rate several times, with the most recent drop taking it from 4.25% to 4% in August 2025. It’s the fifth cut in the past year and has sparked fresh hope that mortgage costs might finally be easing. But what does this actually mean for borrowers?

Tracker and variable mortgages

If you’re on a tracker mortgage, you’ll feel the benefits immediately. Tracker deals follow the Bank Rate, so your monthly repayments will usually move in line with any cut. For those on a standard variable rate (SVR), it’s less straightforward. Hundreds of thousands of homeowners are on SVRs, and while lenders aren’t obliged to pass on the reduction, many do. If yours does, you could see a small but welcome drop in payments.

Fixed-rate mortgages

If you’re locked into a fixed deal, the latest cut won’t change anything straight away. But if your term is coming to an end soon, there’s reason to be optimistic. Fixed-rate deals are starting to come down, with some two-year fixes now cheaper than five-year ones for the first time since 2022. Average two-year rates are hovering around 5%, while the very best deals for those with larger deposits can fall closer to 3.8%. That’s a considerable improvement compared to a couple of years ago.

Shifting market

There are also signs of renewed confidence in the housing market. Mortgage approvals hit a six-month high in July, even as house prices edged down slightly. For some households, remortgaging will still mean higher monthly payments - an average rise of around £107. But for others, especially those coming off the very high fixed rates of 2023, the change could actually bring some savings.

What does this mean?

In short, the latest Bank Rate cut is good news. It won’t transform the mortgage market overnight, but it’s a step in the right direction. Homeowners on tracker or variable deals should see relief straight away. For those on fixed rates, the impact will be felt when it comes time to renew, and overall, the trend is finally moving in borrowers’ favour.

If your mortgage deal is due to end, now could be the perfect time to explore your options. Even a small reduction in rates can add up to significant savings over the long term.