Mortgage rates are a core component of mortgage repayments as the rate you qualify for helps determine how much your agreement will cost. There are many variables that affect mortgage rates, including the economic climate and the lender’s appetite for risk.
You can read more and compare the latest deals in our guide to mortgage rates.
The mortgage rates available are determined by the following factors.
The Bank of England’s base rate
Wider economic factors
Mortgage lenders’ appetite for risk
The applicant’s credit history
The amount of deposit the applicant can put down
The biggest factor that shapes mortgage rates in the UK is the Bank of England’s base rate. Since the economic turmoil of 2022, mortgage rates have fluctuated in line with frequent changes to the central bank’s base rate, as shown in this table.
|
Year |
Year-End Base Rate |
|
2016 |
0.25% |
|
2017 |
0.50% |
|
2018 |
0.75% |
|
2019 |
0.75% |
|
2020 |
0.10% |
|
2021 |
0.25% |
|
2022 |
3.50% |
|
2023 |
5.25% |
|
2024 |
4.75% |
|
2025 |
3.75% |
Not necessarily. The headline interest rate is only one part of the cost. A mortgage with a slightly lower rate might come with high product fees (e.g., £999 or more), which could make it more expensive overall than a higher-rate deal with no fees, especially for smaller mortgages. You should always look at the "overall cost for comparison" or ask a broker to do the maths for your specific loan amount.
THINK CAREFULLY BEFORE SECURING OTHER DEBTS AGAINST YOUR HOME. YOUR HOME MAY BE REPOSSESSED IF YOU DO NOT KEEP UP REPAYMENTS ON A MORTGAGE OR ANY OTHER DEBT SECURED ON IT.
IF YOU ARE THINKING OF CONSOLIDATING EXISTING BORROWING YOU SHOULD BE AWARE THAT YOU MAY BE EXTENDING THE TERMS OF THE DEBT AND INCREASING THE TOTAL AMOUNT YOU REPAY.
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