Sharp decline in mortgage rates continues as lenders lower interest rates even further: How low can they go?
## Remortgage Rates Hit New Lows: A Boon for Homeowners with Larger Deposits
In a welcome development for homeowners, remortgage rates have been on a steady decline since mid-2024, offering significant savings for those looking to refinance their mortgages. As of July 2025, the average two-year fixed mortgage rate stands at 5.09%, while the five-year rate is at 5.08%, both figures marking a decrease from previous months and a substantial drop compared to the same period last year [1].
Lenders such as Barclays, Santander, Halifax, and Lloyds Bank have all reduced their mortgage rates, providing more choices for borrowers and easing the stress test rules, which could boost affordability for both new buyers and those seeking to remortgage [1].
### Deposit Size and Remortgage Rates
While comprehensive deposit-specific remortgage rate data for all loan-to-value (LTV) bands is not available, an example from May 2025 shows that for remortgages at 60% LTV (i.e., with a 40% deposit), rates are more competitive than the broader market averages:
| Term | Remortgage Rate (60% LTV, May 2025) | Typical Reversion Rate | |--------------|-----------------------------------|-----------------------| | 2-year fixed | 3.99% | 7.24% | | 5-year fixed | 3.99% | 7.24% | | 10-year fixed| 4.49% | 7.24% |[3]
These rates suggest that borrowers with larger deposits (lower LTVs) can access significantly better deals than the national average for new mortgages (currently around 5.11% overall) [1]. Unfortunately, there is no direct comparison for remortgages at higher LTVs (smaller deposits) in the latest data, but historical trends show that lower LTVs consistently secure the best rates.
### Comparing Remortgage Rates to New Mortgage Rates
For new mortgages, the cheapest fixed rates are generally lower for buyers with substantial deposits—often at 60% LTV or below—but these deals are not always widely publicized and are typically available only to those with excellent credit and significant equity or savings. The average new fixed rates (reflecting a blend of deposit sizes and credit profiles) are currently:
- Two-year fixed: 5.09% - Five-year fixed: 5.08%[1]
The cheapest available remortgage rates at 60% LTV are notably lower, at 3.99% for both two-year and five-year terms [3], indicating a clear advantage for those with larger deposits.
### Key Takeaways
- Remortgage rates are lower than a year ago and continue to decline, with increased product choice and relaxed lender criteria [1]. - Borrowers with larger deposits (lower LTVs) can access significantly cheaper remortgage rates—as low as 3.99% for two- and five-year terms at 60% LTV [3]. - The cheapest remortgage deals are substantially below the national average for new fixed-rate mortgages (5.09% two-year, 5.08% five-year) [1][3]. - Market trends favour those with existing equity (i.e., larger deposits), as these borrowers benefit from both lower rates and greater lender flexibility. - Data on remortgage rates for higher LTVs (smaller deposits) is limited in the latest figures, but historically, these borrowers face higher rates.
Overall, remortgagors with substantial deposits are currently in a strong position to secure market-leading rates, well below the averages available to most new borrowers [1][3].
[1] Moneyfacts [2] Trinity Financial [3] Moneyfacts, data from May 2025
- For homeowners with larger deposits, the current remortgage rates offer significant savings, with the average two-year fixed mortgage rate at 3.99%, making it a more competitive deal even compared to the national average for new mortgages.
- In the banking sector, some lenders such as Barclays, Santander, Halifax, and Lloyds Bank have reduced their mortgage rates, providing a boost for both new buyers and those seeking to remortgage, especially those with higher deposit sizes.
- Investing in personal-finance strategies can help homeowners build larger deposits for properties, potentially leading to accessing more competitive remortgage rates and reducing overall financial obligations by taking advantage of lowered remortgage rates when the time comes.
