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 September 2023, the average 10-year fixed rate interest rate reached 5.1 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 2022, reaching close to 1.3 million. Despite the number of transactions falling, this figure was higher than the period before the COVID-10 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 fourth 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 five million homeowners are projected to see their deal expire by the end of 2026. About two million of these loans are projected to experience a monthly payment increase of up to 199 British pounds by 2026.

The average value of mortgage loans granted in the UK since 2016 ranged between 156,000 British pounds and 203,000 British pounds. In the third quarter of 2024, the average mortgage loan amounted to nearly 196,390 British pounds - the second-highest figure on record after the third quarter of 2022. The overall increase in the average value of mortgages granted can be explained by the accelerated increase in house prices since the outbreak of the coronavirus (COVID-19) pandemic.

Since 2004, the median value of a mortgage advance for a home purchase in the UK has more than doubled. In 2023, the average mortgage advance stood at 185,000 British pounds. The increase has been a direct result of the overall rise of house prices in the UK.

The first-time buyer average mortgage increased across all regions in the United Kingdom in 2023. London had the largest average mortgage size at over 383,386 British pounds. This was because it was also the region with the most expensive hosing.

Mortgage interest rates in the UK were on a downward trend for more than a decade before soaring in 2022. In the second quarter of 2024, the average weighted interest rate stood at 4.8 percent - nearly three 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 61 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 1.9 trillion euros.

Interest Rate on Outstanding Mortgages in the United Kingdom decreased to 3.79 percent in December from 3.80 percent in November of 2024. This dataset includes a chart with historical data for the United Kingdom Interest Rate on Outstanding Mortgages.

The median loan-to-value ratio for mortgages in the UK in 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. Across the country, the LTV ratio was the lowest in London, and the highest in Northern Ireland.

Mortgage repayments as a percentage of monthly equivalised disposable household income, throughout the house price and income distribution.

Interest rate on new mortgages in the United Kingdom increased to 4.51 percent in January from 4.47 percent in December of 2024. This dataset includes a chart with historical data for the United Kingdom Interest Rate on New Mortgages.

Housing affordability in the UK has worsened notably since 2020, with the share of income spent on mortgage rising for first-time and repeat buyers. In 2023, homebuyers spent, on average, 20.6 percent of their income on mortgage payments, 4.4 percentage points higher than in 2020. This increase was higher for first-time buyers than for repeat buyers. House prices have soared since the COVID-19 pandemic, followed by a dramatic increase in interest rates. As fewer people can afford to buy a home, the number of mortgage approvals for house purchase has dropped.

Average weekly household expenditure on goods and services in the UK. Data are shown by region, age, income (including equivalised) group (deciles and quintiles), economic status, socio-economic class, housing tenure, output area classification, urban and rural areas (Great Britain only), place of purchase and household composition.

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.

Total expenditure on rent for renters and on mortgages for mortgage holders, FYE 2021

The UK housing market continued to show significant regional variations in 2024, with London maintaining its position as the most expensive city for homebuyers. The average house price in the capital stood at 519,579 British pounds in October, nearly double the national average of 292,059 British pounds. However, the market dynamics are shifting, with London experiencing only a modest 0.2 percent annual increase, while other cities like Newcastle upon Tyne and Belfast saw more substantial growth of 8.8 percent and 6.8 percent respectively. Affordability challenges and market slowdown Despite the continued price growth in many cities, the UK housing market is facing headwinds. The affordability of mortgage repayments has become the biggest barrier to property purchases, with the majority of the respondents in a recent survey citing it as their main challenge. Moreover, a rising share of Brits have reported affordability as a challenge since 2021, reflecting the impact of rising house prices and higher mortgage rates. The market slowdown is evident in the declining housing transaction volumes, which have plummeted since 2021. European context The stark price differences are mirrored in the broader European context. While London boasts some of the highest property prices among European cities, a comparison of the average transaction price for new homes in different European countries shows a different picture. In 2023, the highest prices were found in Austria, Germany, and France.

When comparing the mortgage or rental costs incurred by owners with mortgage, private renters and social renters in England, private renters pay a considerably larger share of their income than the other two groups. While owner occupiers with mortgages paid approximately 18.7 percent of their income on mortgage in 2024, private renters paid 34 percent, or more than one third. In terms of average monthly costs, renting a three-bedroom house is more expensive than buying.

Expenditure on rent by renters and mortgages by mortgage holders, by region and age from the Living Costs and Food Survey for the financial year ending 2022. Data is presented as a proportion of total expenditure and a proportion of disposable income.

This dataset contains quarterly median loan to value ratios for first time buyers in England.

This dataset contains quarterly median loan to value ratios for first time buyers in England. The data is owned by the Council of Mortgage Lenders (CML) and permission has been given to publish to ODC.

The benchmark interest rate in the United Kingdom was last recorded at 4.50 percent. This dataset provides - United Kingdom Interest Rate - actual values, historical data, forecast, chart, statistics, economic calendar and news.