The Bank of England has just raised the base rate to 4%. It's the interest rate rise everyone will be talking about this week, but most fixed-rate mortgages are priced using swap rates, which moved weeks ago. So it's likely to change less about your move than you'd expect.
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The coverage will make it sound as if one number sets every mortgage in the country. It doesn't. In the video, James Stevenson, our Managing Director of Sales, and Richard Merrett, Managing Director of Alexander Hall, talk through what it means for first-time buyers, anyone whose fixed rate is ending and sellers this winter. We covered the basics when rates were climbing in 2023, and most of that advice still stands.
What are swap rates, and why do they matter more than the base rate?
Swap rates are the financial markets' running forecast of where interest rates are heading, and lenders use them to price most fixed-rate mortgages. The base rate is the Bank of England's own rate. It affects trackers and standard variable rates on the day, but fixed rates follow swap rates.
The everyday name for the cost of borrowing. You'll see it used a lot in the news to mean the base rate, but that can be misleading. Strictly, it's the rate on a particular loan or mortgage, and both the base rate and swap rates feed into it.
Who it affectsEveryone who borrows, in different ways and at different times
The Bank of England's own rate, set at its scheduled meetings. It rose to 4% on Thursday 5 November.
Who it affectsTracker and standard variable rate borrowers, straight away. It factors into fixed rates, but doesn't decide them on its own.
The financial markets' running forecast of where interest rates are heading, updated every day.
Who it affectsAnyone taking out a new fixed rate, indirectly. Lenders use them as a key input, so they don't match the rate you're offered one for one.
Because swap rates move on what the markets expect, lenders usually build an expected rise into their fixed-rate deals weeks before the Bank announces anything. This time, you could watch it happen: Rightmove's October figures put the average two-year fix at 5.55%, up from 4.25% in February, well ahead of today's decision. Anyone already holding a mortgage offer keeps that rate, and anyone still looking is choosing from deals that already reflect most of today's rise. Whether you're buying or selling, the announcement itself is unlikely to change much for you.
If your own fixed rate ends soon, Richard covers when to start looking in the video, and there's more in what to do before your 5-year fixed rate ends.
Will interest rates affect my house price?
Less than you'd expect, whichever rate you mean. The base rate is a national number, and your sale happens on one street, with buyers who want to live on that street. Think back to what your Valuer said when they sat at your kitchen table with a sales strategy. Chances are, it still holds. A rate decision doesn't move the school catchment, the walk to the station or the reason a buyer asked to see your home in the first place.
"We do not see a night and day difference when the base rate changes. It often follows the direction of sentiment that's been changing for a lot longer, and often that effect is over the market at large instead of the opportunities any one seller or buyer would experience. Regardless, we're prepared for every way the market changes, because a good valuation isn't just an agent handing out a magic number. It is a precise analysis based on data, experience and your goals in the sale. It results in an entire strategy that is prepared to flex for any situation that arises, base rate included."
James Stevenson
Managing Director of Sales at Foxtons
When will mortgage rates go down?
Nobody can promise you a date. Mortgage rates follow swap rates, and swap rates follow sentiment: the latest inflation figures, the Autumn Budget and whatever the Bank indicates about its next meetings.
So there's little to gain from waiting for a cut that may or may not come. Plenty of people are moving for reasons that won't wait for the Bank of England. Some have a good deal through a skilled mortgage adviser and don't want to lose it, and London has many buyers who don't need a mortgage at all.
If you're buying, that pause works in your favour. Rightmove's October figures put the number of homes for sale across Great Britain at its highest for the time of year since 2014, and January is when everyone else turns up, new year's resolve and all.
Winter buyers are a smaller crowd and the most motivated of the year. They want to be well on their way before January, and the sellers they meet tend to feel the same, so a winter move is usually serious on both sides. Whichever side you're on, the person across the table wants a fast, smooth move as much as you do.
Should I sell my house now?
If you were planning to, most likely yes. Here's where to put your time and energy now.
Every stage of the sales process, after the base rate announcement
It's never a bad time to book a valuation
Foxtons Valuers are trained across the entire market and can tell you exactly how buyers move across the capital, and they'll walk you through it at your valuation. You can absolutely ask how the base rate changes your local market, but there's a lot more than one number at work in a London neighbourhood. Your pricing strategy will take the news into account and, more importantly, everything going on underneath it.
Make room for the winter buyer
Your viewing feedback in My Foxtons is the most honest account you'll get of the impression your home makes. Some of it you can fix before the next viewing. The rest tells us which buyers to bring through the door next.
The other thing to do now is get your end of the paperwork done. With Conveyan's Sale-Ready Pack, the contract can go out as early as the day you accept an offer.
Keep your sale moving to completion
Once your buyer's mortgage offer is issued, their rate is held, and no rate decision can touch it. That's one part of your sale locked in.
From here, pace is what matters. Answer your solicitor the day they ask, and we'll chase the rest. We exchange 18% faster in London than the industry average, so we’re ready to help you move quickly (TwentyCi data, average time to exchange on a property in London in 2026).
Secure your onward mortgage early
Once you've agreed a sale, you know your budget precisely. Get your purchase solicitor in place early, then speak to Alexander Hall about your mortgage, whether you're taking it with you or starting fresh. Then start viewing, and you become exactly the kind of buyer you were hoping for when you listed. Ask about the seller's timeline when you view, because a seller moving on the same schedule as you helps it all go through neatly. Here are more tips on juggling your sale and onward move.
Base rate days come and go, and London keeps moving.
We agree sales every week of the year, whatever the Bank has just announced, and this winter is no different. Your local Foxtons office knows what's selling on your street this month and which buyers are keen to get the keys to their new home. Come and see us, whether you're buying or selling, and we'll get your plan moving.
Read the full transcript
Richard: The Bank of England has raised the base rate to 4%. We expected this, and it's a smaller change than the headlines will suggest.
James: Today, we're starting with first-time buyers, and we'll get to sellers and anyone coming off a fixed mortgage. I'm James Stevenson, here with Richard Merrett, and we're back at The Brentford Project by Ballymore to talk it through.
James: So what does a first-time buyer mortgage look like right now, and how much can first-time borrowers afford to borrow?
Richard: Okay, so a few different things to look at there. I think first and foremost, you start with rates, because that's where everybody is, and there's no shying away from the fact that rates are higher today than they were three years ago. However, they're lower than they've been at their highest point, so there are some positives to take from that. But we're certainly a long way away from the 1 and 2% interest rates that typified the last 10 years or so.
Richard: What do you think about the opportunity for first-time buyers in the market today?
James: I think there's always opportunity, depending on what's going on in the market. It shouldn't really deter you from making your move onto the ladder. If you can afford to get onto the ladder, there are always reasons to do that. Right now, there's lots of sentiment in the market about high interest rates decreasing affordability. However, a lot of the time, that's also coupled with softer prices from sellers as well. So the opportunity today is as good as it has been for as long as I can remember for a first-time buyer.
Richard: What about mortgage rates? Does waiting for rates to fall pay off?
James: That is a good question. I would say it depends on your personal circumstances more than anything. However, right now, where interest rates are, what I do feel is that the sentiment in the market is actually potentially deterring a few buyers from going about their search. And what that means is there is less demand in the market at a time when there is a good volume of properties and supply in the market. So buying today means you've probably got less competition, whereas if interest rates dropped, what you're going to see is a lot more confidence coming to the market, and therefore you could be competing against an infinite number of more buyers, as opposed to what's happening today.
Richard: So, James, someone's buying a home for the first time, and they've assessed their mortgage options and spoken to a broker. What's their next move?
James: The next step is definitely register with an estate agent and start getting out on viewings. The time invested in getting into an estate agent's car and going to visit a number of properties will really give a buyer a good understanding as to what affordability is and what value is in the market. And you'll often find the more properties you see, the more confident you are then in terms of values and what offer you should be making.
James: And if someone's fix is coming to an end this year, what should they be starting to do today?
Richard: So I think first and foremost, go and speak to a broker and take advice. You can start to address your mortgage options or secure a deal six months before the end of your current product. So we're actually already starting to look at people whose product runs into 2027. And because rates are higher than they have been within the last five years, and at certain points lower than they have been within the last two, what we're advocating with people is a "plan for the worst and hope for the best" mentality. Because what I think most people don't realise you can do is secure a deal today and then monitor it between now and the point at which your deal expires. And we're regularly in the position where we're able to contact a client who we've already secured something for and say, "Do you know what, you can save a little bit more money."
James: So if you are thinking of selling, here's what I would expect. London's winter market is often perceived as quieter, because the perception is that most people plan to move in the new year. But our buyers looking today are often very serious and motivated. For example, nobody skips the Christmas shopping to view a flat on a dark December afternoon just to see. There's usually a very good reason: a new job across town, or two children who can't share a room any longer, as an example. And you probably have a reason like that too. So is it worth waiting for a busier market, knowing that you're also buying in a potentially busier market? Even if you got a little more for your home today, five or 10 years from now you won't remember that small gain. I would suggest you move when your life calls for it, and you'll know you're in the right home every time you walk in the door.
James: Ultimately, if you're selling to buy, a softer market works in your favour too. In London especially, the discount you get on your next home is usually bigger in pounds than the one you can give on yours, and we call that the trading gap. But your price will be set much closer to home: by who's booking viewings on your street today, who's going under offer nearby and what gets those offers through to completion. None of that relies on the Bank of England, and neither should you. Book a valuation, and you'll be working with the real numbers today.
Source: This article draws on the Foxtons sales team, who value and sell homes across London and Surrey every week. It reflects what James Stevenson, Managing Director of Sales, sees across our offices, with mortgage insight from Richard Merrett, Managing Director of Alexander Hall. If you have any questions on this article, email us to ask a Foxtons expert.
THINK CAREFULLY BEFORE SECURING OTHER DEBTS AGAINST YOUR HOME. YOUR HOME MAY BE REPOSSESSED IF YOU DO NOT KEEP UP REPAYMENTS ON YOUR MORTGAGE OR ANY OTHER DEBT SECURED ON IT.
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