Bank of England Cuts Rates: Sub-4% Mortgages Now Within Reach

The UK mortgage market has seen a fresh wave of competition, with rates dipping below 4% for the first time in months. Following the Bank of England’s latest base rate cut to 4%, two major lenders have rolled out new products — including a standout 3.73% two-year fixed deal from NatWest for eligible first-time buyers.

While the move is welcome news for borrowers, experts caution that further rate drops may be modest. Strong lender competition, combined with the largest number of homes for sale in a decade, is improving affordability — but the window to take advantage of sub-4% rates may not last long.

NatWest’s improved two-year fixed offer at 3.73% is one of the most competitive seen this year, with eligibility depending on deposit size and borrower profile. Average two-year fixed mortgage rates now stand at 4.68%, while five-year fixed deals average 4.83%, according to Uswitch data.

Rightmove figures show a steady decline over the past year, with the average two-year fixed rate at 80% loan-to-value (LTV) falling from 5.21% to 4.38%, and the five-year fixed equivalent dropping from 4.91% to 4.52%.

Matt Smith, mortgage expert at Rightmove, says the Bank of England’s third base rate cut of the year has given lenders room to reprice products, though significant reductions are unlikely in the short term. He notes that with strong housing supply and eased affordability criteria, buyers can borrow more responsibly — creating positive momentum for the second half of the year.

The market anticipates one more Bank Rate cut before year-end, with a slim possibility of two. If realised, this could trigger another cycle of lender repricing, but gains may come in smaller steps.