Mortgage Rates Drop Below 4% for the First Time Since 2022 — What It Means for Property Investors

For the first time since 2022, average fixed mortgage rates in the UK have dropped below the 4% mark. The best two-year fixed deals now start from around 3.55%, while five-year fixes sit at approximately 3.76%. For property investors who have spent the past two years navigating elevated borrowing costs, this shift fundamentally changes the numbers on new acquisitions and refinancing decisions.

The Numbers Behind the Drop

The fall has been steady rather than sudden. Average two-year fixed rates have come down from 5.48% at the start of 2025 to 4.83% today, while five-year fixes have eased from 5.25% to 4.91% on average. But it is at the sharper end of the market where the real opportunities lie. Nationwide is offering a two-year fix at just 3.59% for borrowers at 60% loan-to-value, and several other major lenders including Santander, Virgin Money, and NatWest have all cut rates in recent weeks.

Mortgage product availability has also surged to an 18-year high, giving borrowers more choice than at any point since before the global financial crisis. This combination of falling rates and expanding product ranges is creating genuine competition among lenders, which is pushing pricing lower still.

Why Rates Are Falling — and Where They Go Next

The Bank of England held its base rate at 3.75% on 5 February 2026, keeping powder dry as inflation came in above expectations in late 2025. However, markets are pricing in at least one further quarter-point cut when the Monetary Policy Committee meets on 19 March, with consensus pointing towards a base rate of 3.25% by the end of 2026.

Swap rates — the wholesale rates that underpin fixed mortgage pricing — have already moved ahead of base rate decisions, which is why fixed deals have fallen even while the base rate has held. If the Bank does deliver two further cuts this year, the best fixed rates could edge towards the 3.2% to 3.3% range by autumn. That said, lenders have likely priced in much of the expected easing already, so dramatic further drops are unlikely without a significant shift in the economic outlook.

What This Means for Property Investors

The immediate impact is straightforward: borrowing is materially cheaper than it has been for over three years. On a typical £200,000 interest-only mortgage, the difference between a 5.5% rate and a 3.6% rate saves roughly £320 per month — a figure that transforms cash flow projections and yield calculations on buy-to-let properties.

For investors sitting on standard variable rates — which still average a punishing 7.15% — the case for remortgaging is now overwhelming. The gap between SVRs and the best fixed deals has widened to over 350 basis points, making inaction increasingly expensive with every passing month.

The broader market is responding accordingly. Agreed sales are running at their fourth strongest February level in a decade, and new listings have hit a ten-year high for the month. Supply is up 6% year-on-year, which is keeping price growth in check at a modest 1.3% annually. For investors, this is a favourable dynamic — cheaper finance without the froth of a rapidly rising market.

Looking Ahead

The window of opportunity here is real but not unlimited. House price forecasts for 2026 cluster around 2% to 4% growth, and once the spring buying season gains momentum, competition for quality stock will intensify. Investors who act now benefit from lower rates, high supply, and relatively subdued buyer competition — a combination that rarely persists for long.

The prudent move is to lock in rates while pricing remains competitive, particularly on five-year fixes where the spread over shorter-term deals has narrowed. Rates may edge lower through the year, but attempting to time the absolute bottom is a game that rarely pays off. The fundamentals for acquisition and refinancing have not been this favourable since early 2022, and for investors with pipeline deals or expiring fixes, the numbers now work in a way they simply have not for some time.