Mortgage rates increased at a record pace in 2022, with the 10-year fixed mortgage rate doubling between March 2022 and December 2022. With inflation increasing, the Bank of England introduced several bank rate hikes, resulting in higher mortgage rates. In May 2025, the average 10-year fixed rate interest rate reached **** percent. As borrowing costs get higher, demand for housing is expected to decrease, leading to declining market sentiment and slower house price growth. How have the mortgage hikes affected the market? After surging in 2021, the number of residential properties sold declined in 2023, reaching just above *** million. Despite the number of transactions falling, this figure was higher than the period before the COVID-19 pandemic. The falling transaction volume also impacted mortgage borrowing. Between the first quarter of 2023 and the first quarter of 2024, the value of new mortgage loans fell year-on-year for five straight quarters in a row. How are higher mortgages affecting homebuyers? Homeowners with a mortgage loan usually lock in a fixed rate deal for two to ten years, meaning that after this period runs out, they need to renegotiate the terms of the loan. Many of the mortgages outstanding were taken out during the period of record-low mortgage rates and have since faced notable increases in their monthly repayment. About **** million homeowners are projected to see their deal expire by the end of 2026. About *** million of these loans are projected to experience a monthly payment increase of up to *** British pounds by 2026.

The interest rates of most types of personal loans in the United Kingdom (UK) have increased slightly in 2024. However, the interest rates applied to personal loans of 3,000 British pounds were slightly lower than in the previous year, amounting to ***** percent. Smaller personal loans had, in general, higher interest rates than bigger loans.

United Kingdom UK: Lending Interest Rate data was reported at 0.500 % pa in 2014. This stayed constant from the previous number of 0.500 % pa for 2013. United Kingdom UK: Lending Interest Rate data is updated yearly, averaging 6.963 % pa from Dec 1967 (Median) to 2014, with 48 observations. The data reached an all-time high of 16.313 % pa in 1980 and a record low of 0.500 % pa in 2014. United Kingdom UK: Lending Interest Rate data remains active status in CEIC and is reported by World Bank. The data is categorized under Global Database’s United Kingdom – Table UK.World Bank.WDI: Interest Rates. Lending rate is the bank rate that usually meets the short- and medium-term financing needs of the private sector. This rate is normally differentiated according to creditworthiness of borrowers and objectives of financing. The terms and conditions attached to these rates differ by country, however, limiting their comparability.; ; International Monetary Fund, International Financial Statistics and data files.; ;

Interest rates in the UK spiked in 2022 and 2023, with the average rate for new mortgage advances to individuals and individual trusts rising by 3.61 percentage points between January 2022 and January 2024. Mortgages on a floating interest rate were the most expensive as of January 2024, at 5.75 percent. On the other hand, the average rate for new advances with a five-year fixed rate was 4.88 percent.

The benchmark interest rate in the United Kingdom was last recorded at 4.25 percent. This dataset provides - United Kingdom Interest Rate - actual values, historical data, forecast, chart, statistics, economic calendar and news.

Bank Lending Rate in the United Kingdom remained unchanged at 8.58 percent in May. This dataset provides - United Kingdom Prime Lending Rate - actual values, historical data, forecast, chart, statistics, economic calendar and news.

Mortgage interest rates in the UK were on a downward trend for more than a decade before soaring in 2022. In the fourth quarter of 2024, the average weighted interest rate stood at **** percent — nearly ***** times the interest rate in the fourth quarter of 2021. Mortgage rates also vary depending on the type of mortgage: Historically, fixed rate mortgages with a shorter term had on average lower interest rates. What types of mortgages are there? In terms of the type of interest rate, mortgages can be fixed and variable. A fixed interest rate is simply a mortgage where the rate of repayment is fixed, while a variable rate depends on the lender’s underlying variable interest rate. Furthermore, mortgages could be for a house purchase or for refinancing. The vast majority of mortgages in the UK are fixed rate mortgages for house purchase, and only a small share is for remortgaging. How big is the UK mortgage market? The UK has the largest mortgage market in Europe, amounting to nearly ***billion euros in gross residential mortgage lending as of the second quarter of 2023. When comparing the total outstanding residential mortgage lending, the UK also ranks first with about *** trillion euros.

Mortgage interest rates in Europe soared in 2022 and remained elevated in the following two years. In many countries, this resulted in interest rates more than doubling. In the UK, the average mortgage interest rate rose from **** percent in 2020 to **** percent in 2023, before falling to **** in 2024. Why did mortgage interest rates increase? Mortgage rates have risen as a result of the European Central Bank (ECB) interest rate increase. The ECB increased its interest rates to tackle inflation. As inflation calms, the ECB is expected to cut rates, which allows mortgage lenders to reduce mortgage interest rates. What is the impact of interest rates on home buying? Lower interest rates make taking out a housing loan more affordable, and thus, encourage homebuying. That can be seen in many countries across Europe: In France, the number of residential properties sold rose in the years leading up to 2021, and fell as interest rates increased. The number of houses sold in the UK followed a similar trend.

This dataset provides values for INTEREST RATE reported in several countries. The data includes current values, previous releases, historical highs and record lows, release frequency, reported unit and currency.

The effective fixed interest rate of new consumer credit in the United Kingdom (UK) reached over **** percent in December 2024. During the first half of 2020, the interest rates for all new household lending declined sharply. However, since July 2020, interest rates for secured and unsecured loans have soared. In the first quarter of 2024, the average interest rates of personal loans in the UK remained relatively stable.

United Kingdom UK: Real Interest Rate data was reported at -1.195 % pa in 2014. This records an increase from the previous number of -1.378 % pa for 2013. United Kingdom UK: Real Interest Rate data is updated yearly, averaging 1.802 % pa from Dec 1967 (Median) to 2014, with 48 observations. The data reached an all-time high of 6.438 % pa in 1985 and a record low of -12.172 % pa in 1975. United Kingdom UK: Real Interest Rate data remains active status in CEIC and is reported by World Bank. The data is categorized under Global Database’s United Kingdom – Table UK.World Bank.WDI: Interest Rates. Real interest rate is the lending interest rate adjusted for inflation as measured by the GDP deflator. The terms and conditions attached to lending rates differ by country, however, limiting their comparability.; ; International Monetary Fund, International Financial Statistics and data files using World Bank data on the GDP deflator.; ;

The interest rate for credit cards in the UK grew to an all-time high in May 2025, even though the base rate for the Bank of England grew at a slower pace that month. Credit card interest rates tend to be significantly higher than other forms of lending, and the United Kingdom is no exception to this. By May 2025, the average interest rate had increased to ***** percent. The Bank of England base rate stood at **** percent since April 2025 – which was not yet the highest value observed. Nevertheless, the central bank's interest rate grew slower than that of credit cards.

Mortgage Rate in the United Kingdom decreased to 6.98 percent in June from 7.09 percent in May of 2025. This dataset provides - United Kingdom BBA Mortgage Rate- actual values, historical data, forecast, chart, statistics, economic calendar and news.

Key information about United Kingdom Long Term Interest Rate

• United Kingdom Long Term Interest Rate: Month Avg: United Kingdom: ECB Harmonised was reported at 4.52 % pa in Feb 2025, compared with 4.67 % pa in the previous month.
• UK Long Term Interest Rate data is updated monthly, available from Jan 1993 to Feb 2025.
• The data reached an all-time high of 8.99 % pa in Sep 1994 and a record low of 0.15 % pa in Jul 2020.
• Long Term Interest Rate is reported by reported by CEIC Data.

• In the latest reports, UK Short Term Interest Rate: Month End: ICE LIBOR: 3 Months was reported at 0.09 % pa in Apr 2021.
• The cash rate (Policy Rate: Month End: Base Rate) was set at 4.50 % pa in Feb 2025.
• UK Exchange Rate against USD averaged 0.79 (USD/GBP) in Jun 2023.

Interest rate on new mortgages in the United Kingdom decreased to 4.47 percent in May from 4.49 percent in April of 2025. This dataset includes a chart with historical data for the United Kingdom Interest Rate on New Mortgages.

The effective interest rates of overdraft lending in the United Kingdom (UK) reached 21 percent in March 2024. Meanwhile, outstanding fixed-rate secured loans had some of the lowest interest rates for household lending. Secured loans had, in general, lower interest rates than non-secured lending. In the first quarter of 2024, the average interest rates of personal loans in the UK remained relatively stable.

August 2024 marked a significant shift in the UK's monetary policy, as it saw the first reduction in the official bank base interest rate since August 2023. This change came after a period of consistent rate hikes that began in late 2021. In a bid to minimize the economic effects of the COVID-19 pandemic, the Bank of England cut the official bank base rate in March 2020 to a record low of *** percent. This historic low came just one week after the Bank of England cut rates from **** percent to **** percent in a bid to prevent mass job cuts in the United Kingdom. It remained at *** percent until December 2021 and was increased to one percent in May 2022 and to **** percent in October 2022. After that, the bank rate increased almost on a monthly basis, reaching **** percent in August 2023. It wasn't until August 2024 that the first rate decrease since the previous year occurred, signaling a potential shift in monetary policy. Why do central banks adjust interest rates? Central banks, including the Bank of England, adjust interest rates to manage economic stability and control inflation. Their strategies involve a delicate balance between two main approaches. When central banks raise interest rates, their goal is to cool down an overheated economy. Higher rates curb excessive spending and borrowing, which helps to prevent runaway inflation. This approach is typically used when the economy is growing too quickly or when inflation is rising above desired levels. Conversely, when central banks lower interest rates, they aim to encourage borrowing and investment. This strategy is employed to stimulate economic growth during periods of slowdown or recession. Lower rates make it cheaper for businesses and individuals to borrow money, which can lead to increased spending and investment. This dual approach allows central banks to maintain a balance between promoting growth and controlling inflation, ensuring long-term economic stability. Additionally, adjusting interest rates can influence currency values, impacting international trade and investment flows, further underscoring their critical role in a nation's economic health. Recent interest rate trends Between 2021 and 2024, most advanced and emerging economies experienced a period of regular interest rate hikes. This trend was driven by several factors, including persistent supply chain disruptions, high energy prices, and robust demand pressures. These elements combined to create significant inflationary trends, prompting central banks to raise rates in an effort to temper spending and borrowing. However, in 2024, a shift began to occur in global monetary policy. The European Central Bank (ECB) was among the first major central banks to reverse this trend by cutting interest rates. This move signaled a change in approach aimed at addressing growing economic slowdowns and supporting growth.

The median loan-to-value ratio in the United Kingdom (UK) for sales made in the fourth quarter of 2023 was approximately 69.5 percent. This meant that the average mortgage covered 69.5 percent of the property sales price, leaving the home acquirer to cover the remaining 30.5 percent with their own savings. Regionally, it was North East where the highest average LTV ratio was seen, at 74 percent. Number of mortgage loans In 2023, the number of mortgage sales (PSD) stood at just over 888,000, which was a decrease from the previous year when the number of mortgage sales dropped significantly. Mortgage interest rates The vast majority of mortgage loans were taken out with fixed interest rates. A fixed interest rate is simply a mortgage where the rate of repayment is fixed. The Financial Conduct Authority (FCA) defines a standard variable rate as "the rate that is the lender’s underlying variable interest rate”. It is not surprising that fixed interest rates are the preferred option for so many borrowers - two, three, five and ten year fixed interest rates saw a continuous decrease in recent years, before surging in 2022.

The average interest rate of loans from monetary financial institutions to non-financial corporations in the euro area overall has decreased significantly in 2024 and 2025. In January of 2024 it amounted to 5.16, and by March 2025 it had fallen to 3.93 percent. These figures are a composite cost-of-borrowing indicator that shows the average interest rate of business loans (non-financial), taking into account those with different loan terms or for different amounts.

Financial leasing revenue is expected to remain flat over the five years through 2024-25, sitting at £16.1 billion, including growth of 5.2% in 2024-25. Financial lessors have navigated a turbulent environment over recent years, responding to aggressive rate hikes from the Bank of England ratcheting up borrowing costs. The regulatory climate has also seen significant changes, with financial lessors seeing their accounting and reporting costs climb following changes to the International Accounting Standards. This involved putting leases of more than one year on the balance sheet of the lessee. A rising base rate environment through 2023-24 amid spiralling inflation has aided interest income despite demand being softened by subdued economic growth. Interest rates remained high in 2023-24 as inflation proved sticky, lifting interest income for each transaction, but softening demand as lessees faced greater interest payments, dampening revenue growth. Making things worse, lessors may choose to bear the brunt of interest rate hikes to sustain demand, threatening profitability. In 2024-25, with inflation contained, interest rates will continue coming down, supporting leasing activity through a reduction in interest payments for lessees. However, regulatory changes related to Basel III introductions and new International Accounting Standards will weigh on the average industry profit margin, though they have benefited the Financial Leasing industry's reputation. Lessors have also been proactive in limiting exposure to changes in the value of the pound, which has been particularly volatile in recent years. Lessors entering into forward contracts to lock in exchange rates for a future date have been better able to fend of fluctuations in the pound, supporting profitability. Financial leasing revenue is expected to grow at a compound annual rate of 4.3% to reach £19.9 billion. The higher base rate environment will become the norm for financial lessors, forcing them to adapt to higher borrowing costs to maintain healthy profit. Compliance with legislative changes related to Brexit will also place pressure on profitability. However, the delay of the Basel III reforms will provide banks with flexibility when lending, feeding into lower borrower costs for lessors and supporting profit. The rise of financial technology will also spur technological innovation related to big data analysis for data collected from asset monitoring systems.