The Bank of England cut the base rate to 3.75% in December 2025 - down from a peak of 5.25% in mid-2023 - as inflation has continued to ease. At its February 2026 meeting, the Bank voted to hold rates at 3.75%, though the decision was closer than many expected, with four of nine Monetary Policy Committee members voting for a further cut to 3.5%.

While this is generally good news for borrowers, the impact has had an inconsistent impact on the mortgage market - especially when we compare rates to those seen around five years ago in 2020/2021 (when mortgage rates were lower). In particular, let's look at how rates have changed for those with a smaller vs larger down payment (and consequently, a higher or lower LTV ratio, respectively).

The gap between rates for lower and higher LTV borrowers has narrowed significantly compared to a few years ago. According to Moneyfacts, the average two-year fixed rate at 60% LTV stands at 4.28% in January 2026, while the average two-year fixed rate across all lenders for a 75% LTV mortgage is around 4.49% - a gap of just 0.21 percentage points between these tiers. This is a dramatic contrast to 2021, when lower-LTV borrowers (that is, those contributing more of a deposits) were charged up to 2.5 percentage points less than those with smaller deposits.

Another way to understand this data is to consider how much higher an average rate is now vs six years ago, for different LTVs. For example, a 95% LTV fixed is now 1.6X higher; but a 75% LTV fixes is now 2.8X higher. In other words, the lower LTV loans are paying noticeably higher rates compared to six years ago, compared to the higher LTV loans.

Erin Yurday, co-founder and CEO of NimbleFins said:

"Lenders used to charge quite a bit less for loans with lower loan to value ratios - up to 2.5 percent less in 2020 - because a lower LTV seen as less risky. Basically if a homeowner were to default on their payments and the lender repossessed the home, it would need to recoup a smaller percentage of the house value to repay the debt.

"Charging lower interest to people who own more of their home also incentivises borrowers to repay their mortgages quicker.

"While the current mortgage rates are painful for all borrowers, it's not fair that hardworking Britons who are prudent with their money and look to the future are being penalised in this way."

See our full research here.