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.

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 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.

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.

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.

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.; ;

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.

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.

Mortgage rates in the United Kingdom (UK) have risen dramatically since the beginning of 2022, causing concerns about households with loans up for renewal facing notable increases in costs. That is the case for 1.4 million fixed rate mortgages up for renewal in 2023. This type of mortgage is a popular choice among homebuyers because it allows them to lock in the interest rate for a specific period. After the period runs out, homebuyers need to renegotiate the loan or switch to a variable interest rate. The vast majority of loans up for renewal until 2024 have an initial effective mortgage rate of less than 2.5 percent - significantly lower than the current mortgage rates.

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 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.

The United Kingdom: Interest rates on bank credit to the private sector: The latest value from 2014 is 0.5 percent, unchanged from 0.5 percent in 2013. In comparison, the world average is 11.28 percent, based on data from 135 countries. Historically, the average for the United Kingdom from 1967 to 2014 is 7.37 percent. The minimum value, 0.5 percent, was reached in 2010 while the maximum of 16.31 percent was recorded in 1980.

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.

Key information about United Kingdom Policy Rate

• United Kingdom cash rate (Policy Rate: Month End: Base Rate) was set at 4.50 % pa in Feb 2025, compared with 4.75 % pa in the previous Jan 2025.
• UK Policy Rate averaged 5.75 % pa and is updated monthly, available from Jun 1972 to Feb 2025.
• The data reached an all-time high of 17.00 % pa in Jun 1980 and a record low of 0.10 % pa in Nov 2021.

• In the latest reports, UK Short Term Interest Rate: Month End: ICE LIBOR: 3 Months was reported at 0.09 % pa in Apr 2021.
• Its Long Term Interest Rate (Long Term Interest Rate: Month Avg: United Kingdom: ECB Harmonised ) was reported at 4.67 % pa in Jan 2025.
• UK Exchange Rate against USD averaged 0.79 (USD/GBP) in Jun 2023.
• Its Real Effective Exchange Rate was 87.74 in Jan 2025.

Graph and download economic data for Interest Rates: Long-Term Government Bond Yields: 10-Year: Main (Including Benchmark) for United Kingdom (IRLTLT01GBM156N) from Jan 1960 to May 2025 about long-term, 10-year, United Kingdom, bonds, yield, government, interest rate, interest, and rate.

Based on an "illustrative scenario" in which the United Kingdom (UK) moves to a comprehensive free trade agreement with the European Union (EU) on the 1st of January 2021, this forecast shows the expected annual average bank base interest rate in response to the current Covid-19 pandemic. In a bid to minimize the economic effects of the Covid-19 virus, on the 19th of March 2020 the Bank of England cut the official bank base rate to a record low of 0.1 percent. This historic low came just one week after the Bank of England cut rates from 0.75 percent to 0.25 percent in a bid to prevent mass job cuts in the United Kingdom. In the current forecast scenario, bank interest rates are set to stay between 0.1 percent and 0.2 percent up to 2022.

Key information about United Kingdom Short Term Interest Rate

• United Kingdom Short Term Interest Rate: Month End: ICE LIBOR: 3 Months was reported at 0.09 % pa in Apr 2021, compared with 0.09 % pa in the previous month.
• UK Short Term Interest Rate data is updated monthly, available from Jan 1986 to Apr 2021.
• The data reached an all-time high of 15.38 % pa in Apr 1990 and a record low of 0.03 % pa in Dec 2020.
• Short Term Interest Rate is reported by reported by ICE Benchmark Administration.

• In the latest reports, UK Long Term Interest Rate: Month Avg: United Kingdom: ECB Harmonised was reported at 3.95 % pa in May 2023.
• The cash rate (Policy Rate: Month End: Base Rate) was set at 4.50 % pa in May 2023.
• UK Exchange Rate against USD averaged 0.80 (USD/GBP) in May 2023.

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

Graph and download economic data for Daily Sterling Overnight Index Average (SONIA) Rate: 90th percentile (IUDZLS9) from 2018-04-23 to 2025-07-10 about sonia, Sterling, overnight, percentile, average, interest rate, interest, rate, and indexes.

Business credit interest rate, percent in the United Kingdom, April, 2025 The most recent value is 6.19 percent as of April 2025, an increase compared to the previous value of 6.14 percent. Historically, the average for the United Kingdom from January 2004 to April 2025 is 3.93 percent. The minimum of 1.05 percent was recorded in May 2020, while the maximum of 7.67 percent was reached in August 2007. | TheGlobalEconomy.com