When is the right time to fix your mortgage interest rate?

02/11/2025

There’s speculation that the Bank of England (BoE) will cut the base interest rate further in 2025. Read on to find out why the central bank’s decision could affect you and what to consider when assessing if it’s the “right” time to fix your mortgage interest rate.

A mortgage is a type of loan that you pay interest on. So, if you have a repayment mortgage, each month you’ll repay the accrued interest and a portion of the outstanding balance. 

The BoE sets the base interest rate, and when it changes, banks will often update their interest rates on savings and borrowing. As a result, a change to the base interest rate could affect your mortgage repayments. 

The base rate has changed frequently over the last five years.

It was first slashed to 0.1% in April 2020 to support the economy during the Covid-19 pandemic, and then gradually increased to reach 5.25% in August 2023 in a bid to reduce high inflation. As inflation fell, the BoE started to cut the base rate through a series of changes. As of July 2025, it is 4.25%. 

A fixed-rate mortgage means your repayments remain the same

If you choose to take out a fixed-rate mortgage, your repayments will remain the same for a defined period, such as two or five years. So, you wouldn’t be affected by changes to the BoE base rate during this time.

Ideally, you would fix your interest rate when the base rate is low. 

The alternatives to a fixed-rate mortgage are a tracker- or variable-rate mortgage. With these options, your interest rate and repayments could change during the mortgage term. A tracker-rate mortgage tracks the BoE’s base interest rate, while a variable-rate mortgage would change when your lender updates their rates. 

As a result, you could benefit financially from having a tracker- or variable-rate mortgage if interest rates fell. However, the opposite is true as well – your mortgage repayments would rise if interest rates increased. 

A fixed-rate mortgage may make it easier to budget, as you’ll know exactly how much your mortgage is each month. 

So, if you’d prefer the stability of a fixed-rate mortgage, when is the “right” time to take out a new deal?

Balancing personal and economic factors when fixing your mortgage interest rate

There isn’t a straightforward answer to when you should fix your interest rate, as both economic and personal factors may influence your decision.

From an economic perspective, you might consider what the BoE will do in the coming months.

There’s speculation that the BoE may cut interest rates several times before the end of 2025 to support economic growth. Indeed, Morningstar reported in June 2025 that financial markets expect the base rate to fall to 3.75% by November 2025. 

With this in mind, it might seem like you should wait to fix your mortgage.

However, there aren’t any guarantees that the BoE will follow this path, as numerous factors are considered when setting the base rate, some of which are unexpected. If you consider what’s influenced the BoE’s decisions over the last few years, such as the Covid-19 pandemic and war in Ukraine, you can see how difficult it is to consistently predict what will happen. 

So, focusing on your personal circumstances could help you assess if now is the right time to fix your mortgage. You may want to consider these two questions: 

1. Do you want the certainty a fixed interest rate offers? If you’re worried about how changes to the base rate could affect your finances, fixing your mortgage interest rate could offer peace of mind. 
2. What are your medium-term plans? Your plans will affect which type of mortgage is right for you. For example, if you plan to move home soon, fixing your mortgage interest rate for five years may not make financial sense.

Another factor to consider is the interest rate you’re paying now. 

If your current mortgage deal has expired, you’ll usually be moved on to your lender’s standard variable rate (SVR), which often isn’t competitive. Waiting to take out a mortgage deal to see if interest rates might fall could mean your repayments are higher than necessary now. 

A mortgage adviser could help you understand your options

If you want to discuss your mortgage options, including whether now is the right time to fix your interest rate, please get in touch. We’re here to help you find a mortgage deal that suits you. 

Please note:

This blog is for general information only and does not constitute financial advice, which should be based on your individual circumstances. The information is aimed at retail clients only.

Your home may be repossessed if you do not keep up repayments on a mortgage or other loans secured on it.