Current Trends in Mortgage Rates: March 2025 Update

In March 2025, the mortgage market shows a lot of action. Major lenders adjust their fixed-rate plans as they get ready for the Bank of England (BoE) interest rate talk. This article shows new changes in mortgage rates, how these changes may affect property investments, especially HMOs, and how to work out your monthly payments.

Lender Changes Ahead of Bank Decision

HSBC, Barclays, Santander, and TSB now lower fixed mortgage costs. They make these moves to pull in and keep borrowers before the BoE monetary policy meeting on 20 March. Jo Thornhill reports that HSBC cuts rates by up to 0.2 percentage points on selected deals for both home purchases and remortgages. Barclays acts harder by lowering rates for large loans (over £2 million) by up to 0.25 percentage points and adjusts other rates by up to 0.14 percentage points starting 14 March.

Santander lowers rates for home and buy-to-let loans by up to 0.25 percentage points. TSB also lowers rates but raises some five-year fixes slightly by 0.05 percentage points on some deals.

Effect of Inflation

In February, the BoE lowered the Bank Rate from 4.75% to 4.5%. There is talk that the rate may stay the same next time because inflation went up to 3% in January from 2.5% in December 2024. New inflation numbers come on 25 March and may shape future rate moves. Nick Mendes from John Charcol says that the current rate cuts show more rival banks fighting to keep their space in the market.

Featured Mortgage Deals

Here are some deals now in the market:

• HSBC now shows a two-year fixed mortgage for home purchases at 4.12% with a £999 fee. The five-year plan now goes to 4.07%. For buyers with a 10% deposit, the rates are 4.85% for a two-year deal and 4.61% for a five-year deal, each with a £999 fee.
• Barclays gives a two-year fixed option for buying or remortgaging starting at 4.21% for loans of £2 million or more. Five-year fixed plans start at 4.28% at a 60% loan-to-value ratio.
• Santander and TSB will show their new plans on 14 March. Their new numbers may help both old and new customers get better rates.

For those using HMOs as investments, these cuts can be a sign to think about remortgaging or growing your property group with lower financing costs.

Market Overview of Other Lenders

Other lenders also make changes. The buy-to-let lender, The Mortgage Works, now lowers rates by up to 0.3 percentage points. It shows a two-year fixed purchase rate at 3.24% with a 3% fee for borrowers who have at least 35% equity.

Aldermore, which helps people with lower credit scores, lowers its rates across its high LTV products. New clients may get two-year fixed rates at 6.54% with only a 5% deposit (95% LTV).

The Nottingham Building Society starts two new five-year fixed mortgage plans. They come with a cashback of between £2,500 and £5,000 to help homebuyers with high stamp duty from 1 April.

Monthly Repayment Calculations

For buyers and investors, knowing your monthly payments can give more clarity in a changing rate world. Here is a simple way to work out monthly payments on a mortgage:

Monthly Payment = [Loan Amount x (Interest Rate ÷ 12)] ÷ [1 – (1 + (Interest Rate ÷ 12))^(-Number of Payments)]

For example, if you borrow £200,000 at a 4% rate over 25 years, your monthly cost might be around £1,055. ## Conclusion

The mortgage market changes as rates adjust before the BoE talks. Investors in HMOs and other properties have a good chance to use these lower rates. With banks cutting costs and new deals coming out, now is a good time to review your choices.

It is wise to get advice from a mortgage expert. Websites like Better.co.uk rank highly and can help you move through the simple details of the mortgage market.

Sources:

• Jo Thornhill, Financial Analyst
• Bank of England Monetary Policy Statements
• HSBC, Barclays, Santander, TSB Press Releases
• Better.co.uk

This overview gives you the key facts to help plan your next step in property investment as mortgage rates keep changing.