The lowest fixed rate mortgage deals have gone below 4 per cent - and there is a growing expectation that rates may fall slightly further.
A number of lenders have lowered mortgage rates over the past couple of weeks, including Barclays, Santander, and Yorkshire Building Society.
Yorkshire Building Society's changes were the most dramatic, as the mutual has reduced rates by up to 0.55 percentage points on some mortgages.
It is now offering the cheapest two-year fix on the market for those buying with a 40 per cent deposit.
Its 3.91 per cent deal comes with a £995 product fee. On a £200,000 mortgage being repaid over 25 years, that would mean paying £1,046 a month.
For the vast majority of households, a mortgage rate of between 4 and 5 per cent will be typical depending on the level of equity or size of deposit.
Even for people buying with a 10 per cent deposit, it is now possible to get as low as 4.43 per cent.
> Best mortgage rates calculator: Check the deals you could apply for
The Bank of England opted to hold interest rates in March at 4.5 per cent.
Base rate has been dropped by 0.75 percentage points since August when it was first cut from 5.25 per cent.
It's fair to say the mortgage market is somewhat more settled now.
In 2023, a combination of base rate hikes and worries over inflation figures saw average two-year fixed mortgage rates reach a high of 6.86 per cent in the summer, according to Moneyfacts, while five-year fixed rates hit 6.35 per cent.
However, mortgage rates still remain far higher than borrowers had enjoyed prior to the surge in 2022.
Little more than three years ago, the averages were hovering around 2.5 per cent for a five-year fix and 2.25 per cent for a two-year.
In fact, as recently as October 2021, some of the lowest mortgage rates were under 1 per cent.
Homeowners are starting to see mortgage rates fall in the aftermath of Donald Trump's tariff announcements.
Financial markets are now pricing in greater chances of economic recession with interest rate cuts now forecast to be cut faster than before.
There is now an expectation that the Bank of England will cut interest rates three more times in 2025. They are predicted to end the year at 3.75, down from 4.5 per cent now.
The newfound expectation that interest rates will fall faster is feeding through into Sonia swaps, an inter-bank lending rate which forecasts where mortgage rates will be in two or five years. Lenders use this to determine fixed-rate mortgage pricing.
Following the tariffs being announced, Sonia swap rates fell by close to 0.4 percentage points in two days.
The expectation is that fixed mortgage rates could now follow suit if swaps remain where they are.
Mortgage market expectations are reflected in something known as Sonia swap rates.
These are agreements in which two counterparties, for example banks, agree to exchange a stream of future fixed interest payments for a stream of future variable payments.
Mortgage lenders enter into these agreements to shield themselves against the interest rate risk involved with lending fixed rate mortgages over a period of time.
For example, if a bank lends a mortgage fixed for five years, it wants to have some certainty on what it will cost to fund that over the time period, rather than being dependent on shifting interest rates and potentially being caught out by big unexpected moves.
Put simply, swap rates show what financial institutions think the future holds concerning interest rates.
Swaps have been moving about quite a bit since the middle of December 2024.
As of 6 December, five-year swaps were at 3.8 per cent and two-year swaps were at 4 per cent. They then rose. As of 14 January, five-year swaps were at to 4.28 per cent and two-year swaps are at 4.41 per cent.
But they fallen since mid January and taken a sudden dip following Trump's tariff announcements.
As of 17 April, five-year swaps were at 3.76 per cent and two-year swaps were at 3.75 per cent.
Mortgage rates first began to increase towards the end of 2021, when inflation started to rise, resulting in the Bank of England increasing base rate to try and combat it.
The aftermath of the Covid lockdowns, combined with Russia's invasion of Ukraine in February 2022, triggered a huge inflation spike. Central banks were caught on the hop and rushed to try to rein this in with higher interest rates.
Mortgage rates accelerated after the Liz Truss-Kwasi Kwarteng mini-Budget in late September 2022, with its wave of unfunded tax cuts that unsettled bond markets.
After Truss resigned in October 2022, new Chancellor Jeremy Hunt reversed nearly all of the mini-Budget announcements. The markets calmed down and the cost of borrowing fell with mortgage rates dropping too.
But following a fresh round of stubbornly high inflation figures in late spring 2023, markets began betting the base rate would peak at 6.5 per cent.This triggered a summer inflation panic and led to mortgage lenders whacking their rates up again.
Once the inflation worries subsided, interest rate expectations eased substantially but inflation proved stickier than expected in 2024 and the Bank of England ended up holding base rate at 5.25 per cent.
With inflation finally returning to its 2 per cent target, the Bank finally felt comfortable cutting rates to 5 per cent at its August 2024 meeting and then again in its November meeting.
Having held rates in December, it cut again in February. But with inflation rising again, it held rates in March.
The ONS revealed that inflation was 2.6 per cent in the 12 months to March, down from 2.8 per cent in the year to February. This was better than markets had forecast.
Most economists and personal finance experts think the Bank of England will proceed cautiously from here. The next decision is on 8 May.
Britons face a tough choice over whether to fix their mortgage for two or five years, as the gap between rates on the two narrows.
Five-year fixes are still cheaper on average, though, with the average five-year fix at 5.13 per cent and the average two-year fix at 5.25 per cent, according to Moneyfacts.
Not so long ago, there was a clear preference among borrowers for five-year fixed rates - but that now looks to be changing with borrowers split almost fifty-fifty in what they went for last year, according to UK Finance data.
Choosing what length to fix for depends on what you think may happen to interest rates but should importantly take more account of what your personal circumstances are.
Key factors include whether you may move soon, how much you prefer the security of fixed payments for longer and how well you could cope with a rise in mortgage bills.
Fixed rates of any length offer borrowers certainty over what their payments will be from month-to-month.
Those opting for a shorter two-year fix are backing interest rates falling over the next couple of years, or at least staying steady, so that when it is time to remortgage their bills won't rise.
With five-year fixes borrowers are locking in to rates that they know won't change for longer, perhaps either because they believe rates may rise or because they prefer the security. Five-year fixes were hugely popular when rates were lower.
If rates continue to fall, a tracker mortgage without an early repayment charge could put borrowers in a position to take advantage.
However, for all the potential benefit, a tracker product will also leave people vulnerable to further base rate hikes, while also being more expensive than fixed rates at present.
Whatever the right type of mortgage for your circumstances, shopping around and speaking to a good mortgage broker is a wise move.
> Check the best mortgage rates based on your house price and loan size
Bigger deposit mortgages
Five-year fixed rate mortgages
Barclays has a five-year fixed rate at 3.99 per cent with a £899 fee at 60 per cent loan to value.
Nationwide Building Society has a five-year fixed rate at 4.07 per cent with £999 fees at 60 per cent loan to value.
Two-year fixed rate mortgages
Yorkshire Building Society has a 3.91 per cent two-year fixed rate deal with an £995 fee at 60 per cent loan-to-value.
Santander has a two-year fixed rate at 3.97 per cent with a £999 fee at 60 per cent loan to value.
Mid-range deposit mortgages
Five-year fixed rate mortgages
Barclays has a five-year fixed rate at 4.14 per cent with a £899 fee at 75 per cent loan to value.
Yorkshire Building Society has a five-year fixed rate at 4.14 per cent with a £995 fee at 75 per cent loan to value.
Two-year fixed rate mortgages
Yorkshire Building Society has a two-year fixed rate at 3.92 per cent with a £899 fee at 75 per cent loan to value.
Santander has a two-year fixed rate at 4.06 per cent with a £999 fee at 75 per cent loan-to-value.
Low-deposit mortgages
Five-year fixed rate mortgages
Santander has a five-year fixed rate at 4.52 per cent with £749 fees at 90 per cent loan to value.
NatWest has a five-year fixed rate at 4.57 per cent with £995 fees at 90 per cent loan to value.
Two-year fixed rate mortgages
Yorkshire Building Society has a two-year fixed rate at 4.43 per cent with £1,495 fees at 90 per cent loan to value.
The co-operative bank has a two-year fixed rate at 4.6 per cent with a £749 fee at 90 per cent loan to value.
>> Check our our mortgage tracker to compare the latest available deals
The big advantage to a tracker mortgage is flexibility. The downside is they are currently more expensive, so it will take a few more interest rate cuts before borrowers starting beating the fixed rate deals.
The can sometimes be the case with discount rate mortgages, which track a certain level below the lenders' standard variable rate.
A fixed-rate mortgage will almost inevitably carry early repayment charges, meaning you will be limited as to how much you can overpay, or face potentially thousands of pounds in fees if you opt to leave before the initial deal period is up.
You should be able to take a fixed mortgage with you if you move, as most are portable, but there is no guarantee your new property will be eligible or you may even have a gap between ownership.
Many tracker deals have no early repayment charges, which means you can up sticks whenever you want - and that suits some people.
Make sure you stress test yourself against a sharper rise in base rate than is forecast.