Fixed rate mortgages in London and the UK: Why is it gaining popularity in recent times?

Fixed rate mortgages in London and the UK- Why is it gaining popularity in recent times

Has deciding on a mortgage got you wondering what is the best option you should choose from? You are not alone, with the recent onslaught of economic uncertainty many borrowers in the UK are evaluating and then re-evaluating their mortgage options before deciding on one. But in recent times Fixed rate mortgages seem to have become a more popular mortgage option. Keep reading, to know why and how.

Changing financial landscape in UK

In any market, an oversupply of a commodity results in a drop of the selling price. In the mortgage market too the same principle applies, but in a slightly different way. Bank interest rates influence how much a lender can afford to reduce or raise rates on their mortgages. Following the post pandemic downturn for the past two years, the UK has seen a few encouraging signs in recent times that could interest prospective property buyers. And yes, lenders have been making reductions on their fixed rates for mortgages. Which is definitely a good sign if you are a buyer and thinking of taking on a mortgage for your next property purchase.

So why have bank rates been dropping lately? Easy answer, inflation. The steady drop of inflation levels in the UK has given lending institutions such as banks and building societies an opportunity to invest in their customers by providing better lending rates, in particular for fixed rate mortgages.

Having to deal with fluctuating interest rates can be overwhelming to a borrower. And higher interest rates obviously mean a higher cost on the total mortgage you obtain. Variable mortgages such as SVR or tracker can be beneficial with the possibility of a lower rates, however with the prevailing economic conditions, buyers may be cautious about ‘gambling’ on variable rate mortgages, as there can also be the risk of increasing rates and therefore

higher payments.

Unless you have a fixed-rate mortgage deal, mortgage repayments could change if interest rates rise or fall. For example, if you have a variable rate mortgage, you may have to pay more if interest rates rise or less if interest rates fall. Tracker mortgages, discount mortgages and standard variable rate (SVR) mortgages are also likely to be affected by interest rate fluctuations along with the base rate of the Bank of England.

Benefits on a fixed rate mortgage

Lets consider this example. If you were to purchase a property valued at £200,000 you would ideally borrow 75% of the total, which is £150,000. Based on a 2.5% interest rate for a 25 year term, your monthly repayment would be £672.93. If you were to go with a fixed mortgage, you can be assured that this monthly total will not change. However with a SVR or a tracker mortgage rates are volatile and may rise or fall according to the rates set by the Bank of England. As a borrower you will be looking at a pre-arranged budgetary provision that allows you to pay off the loan as well as manage your home front expenses. This isn’t possible with Variable mortgages. Even a 1% plus change in the interest rate could radically hike up your repayment commitment for each month.

If you are among those intent on a property purchase this year, you may want to speak to an expert mortgage adviser to get the latest updates on interest rates and what suits you most.

At BVS Mortgages and Financial Services, they’ve got expertise that goes beyond the norm. They will be able to evaluate and recommend the most suitable options. Speak to an adviser today.


The UK hasn’t been spared with the fallout stemming from the economic crisis caused by the pandemic. However, in recent times the mortgage market in the UK has been showing positive signs of recovery. Dealing with volatile interest rates especially during a time period such as this can be daunting to a buyer. Evaluating the most profitable options when investing therefore makes sense.

SVR and Tracker mortgages may seem like a great way to cut additional interest payments during low interest rate periods as dictated by the Bank of England. However, an immediate drop in the base rate seems unlikely.

The fixed rate interest rate may be a safer option for you when it comes to dealing with your repayments at the end of the month. Fixed rates do not change and give you the assurance of being able to manage your financial commitments. With many buyers choosing fixed rate mortgages, speak to us and see if it’s the right option for you if you’re thinking of buying a property in 2023.


* Approved by the Openwork Partnership on 20 October 2023