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Is now a good time to buy a house in the UK? In early August, the Bank of England cut the base rate to 4.00% and now average 2‑year fixed rates have dipped below the average 5‑year.
Those two shifts don’t guarantee a smooth slide in pricing, but they do strengthen the buyer’s hand: short‑dated funding is a touch cheaper, lenders are competing again, and choice has improved.
So, is now the right time to buy?
What has changed in August
Leading up to the interest rate decision on August 7th, we’ve seen modest fixed‑rate trims, a wider spread of lender offers at high loan-to-values (LTVs), and the 2‑year vs 5‑year inversion that makes short fixes more competitive. The front end of the swap curve remains softer than the long end, with lenders likely to offer their most competitive pricing in the 2–3 year range while maintaining a more cautious approach on longer-term fixes.
Who should lean in (and how)
First‑time buyers (FTBs)
For first‑time buyers, the market has materially improved. No‑ and low‑deposit routes have returned — including 100% loan-to-value (LTV) mortgages, alongside £5,000‑deposit options and a much broader 95% LTV shelf as more high‑street names re‑enter this band. At the same time, several lenders are using more of their allocation for income multiples above 4.5× on well‑qualified cases, which can lift borrowing capacity at moderate LTVs. These changes don’t remove the need for discipline on affordability and credit, but they do mean deposit hurdles and borrowing headroom are less of a brick wall than they were in 2024.
Home movers
For movers, decisions are more nuanced because you also need to sell. With mortgage pricing a touch friendlier, it may be worth taking a small hit on your asking price to unlock a bigger long‑term move — for example, upsizing for a growing family or securing the “forever” home. Today’s slightly lower rates can soften the impact of a larger mortgage, and a 2‑year fix can keep options open if you plan to refinance, that’s if you think the market will reduce further. If you prioritise payment certainty for the next five years, a 5‑year fix still makes sense; just ensure the early repayment charges (ERCs) and portability fit your likely plans.
Investors
For buy‑to‑let investors, the picture remains challenging: stress tests and regulation are still tight and yields thin at higher LTVs. The Bank Rate cut does ease pressure for existing borrowers on trackers or reversionary rates, but new purchases hinge on making the investment opportunity stack up, or have a more promising opportunity cost over investing in your pension or Individual Savings Account (ISA). Unless you adopt a highly specialised strategy, the typical buy-to-let will struggle due to tax treatment and growing regulation.
Top tips to avoid
Don’t assume a smooth glide‑path
The policy vote was tight and inflation data can surprise. Plan for bumps rather than banking on continuous falls.
Don’t forget transaction costs
Stamp duty, legal fees, surveys, removals, and initial works can dwarf small rate changes in year one. Invest for the long term to ensure you best chance of success.
Don’t over‑stretch at high LTVs
If your income is variable or uncertain, consider waiting until you’ve strengthened reserves or crossed to a lower LTV band.
Don’t chase the absolute bottom
If the home is right and your finances are resilient, missing 0.10% for months could cost you the property you really want.
Thinking about a purchase in the next 3–6 months?
2025 could be the most buyer‑friendly backdrop we’ve seen in several years. If your finances are resilient and the home is right, waiting for perfection may be riskier than acting on “good enough.” The winning strategy is to prepare thoroughly, choose based on total cost, and keep flexibility to benefit from further improvements.
Book a 20‑minute call with Private Finance. We’ll stress‑test your budget, optimise your LTV band, and shortlist products you can secure now and switch‑down if pricing improves.
If you would like to discuss your mortgage options with a qualified professional, you can speak to one of our mortgage advisors on 0800 980 8777, by emailing us at info@privatefinance.co.uk
Disclaimer: The views and opinions expressed in this content are those of the author and do not constitute financial, legal, or professional advice, nor should they be interpreted as a recommendation. They do not necessarily reflect the official views, policies, or positions of Private Finance, and are not intended to represent broader market or industry perspectives.
