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.

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.

In the fourth quarter of 2023, the number of mortgage sales in the UK stood at over 212,000. Of these, the vast majority were taken out with a fixed interest rate. The average mortgage interest rate soared in 2022. That has resulted in an overall decline in mortgage sales and a slight uptick in sales with a variable rate.A fixed interest rate is simply a mortgage where the rate of repayment is fixed. The source defines a standard variable rate as "the rate that is the lender’s underlying variable interest rate. This rate is a basic variable rate charged to borrowers with no discounts or other special deals. It is also the rate used by the lender as a reference rate when defining a discounted variable rate product (e.g., discounted product ABC is 0.50 percent below the lender’s standard variable or basic rate). This is the rate that mortgage deals will often revert to after a special rate period."

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.

Business mortgages, or buy-to-let (BTL) mortgages, are a loan sold to property investors, rather than to people who want to purchase a home to live in. In 2022, the five-year fixed mortgage interest rate for a BTL property in the United Kingdom was 3.47 percent, which was an increase by 0.27 percent compared to the same quarter of 2021. Conversely, the 10-year mortgage rate decreased from 3.81 percent to 3.7 percent. The vast majority of UK landlords had a fixed mortgage, with 5-year fix being the most popular mortgage term.

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.

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.

Mortgage interest rates worldwide varied greatly in 2024, from less than four percent in many European countries, to as high as 44 percent in Turkey. The average mortgage rate in a country depends on the central bank's base lending rate and macroeconomic indicators such as inflation and forecast economic growth. Since 2022, inflationary pressures have led to rapid increase in mortgage interest rates. Which are the leading mortgage markets? An easy way to estimate the importance of the mortgage sector in each country is by comparing household debt depth, or the ratio of the debt held by households compared to the county's GDP. In 2023, Switzerland, Australia, and Canada had some of the highest household debt to GDP ratios worldwide. While this indicator shows the size of the sector relative to the country’s economy, the value of mortgages outstanding allows to compare the market size in different countries. In Europe, for instance, the United Kingdom, Germany, and France were the largest mortgage markets by outstanding mortgage lending. Mortgage lending trends in the U.S. In the United States, new mortgage lending soared in 2021. This was largely due to the growth of new refinance loans that allow homeowners to renegotiate their mortgage terms and replace their existing loan with a more favorable one. Following the rise in interest rates, the mortgage market cooled, and refinance loans declined.

United Kingdom Lending Rate: Outs: NB: Households: MG: Fixed data was reported at 2.110 % pa in Jun 2018. This records an increase from the previous number of 2.100 % pa for May 2018. United Kingdom Lending Rate: Outs: NB: Households: MG: Fixed data is updated monthly, averaging 4.780 % pa from Jan 1999 (Median) to Jun 2018, with 234 observations. The data reached an all-time high of 6.190 % pa in Sep 2008 and a record low of 1.940 % pa in Oct 2017. United Kingdom Lending Rate: Outs: NB: Households: MG: Fixed data remains active status in CEIC and is reported by Bank of England. The data is categorized under Global Database’s UK – Table UK.M002: Lending Rate: Outstanding.

Abstract copyright UK Data Service and data collection copyright owner.

The Survey of Mortgage Lenders (SML) was launched on 1st April 1992 to succeed the 5% Sample Survey of Building Society Mortgage Completions (BSM) (See GN:33191). The aims were to improve the survey in three principal ways:
a) to broaden the range of institutions surveyed to incorporate other mortgage lenders in addition to building societies and Abbey National. With the entry of the high street banks and then the centralised lenders into the mortgage market, information provided by the building societies no longer represented the whole market in the way it did when the BSM was set up in the 1960s.
b) to extend its coverage to include further advances, remortgages and top-up loans in addition to first mortgages.
c) to increase the level of detail on the questionnaire especially with respect to the characteristics of the mortgage loan.
An important consideration for users of the data is that the SML figures allow continuity with the BSM survey results to be maintained for a reasonable period.
Main Topics:
Financial institution code, date mortgage completed, whether dwelling is wholly or partly occupied by borrower. Mortgage amount, type of advance, whether solely for purchase of property, period of mortgage, gross rate of interest, whether the interest charged is fixed or variable rate, whether interest payments are discounted or deferred, repayment method, source of mortgage business, purchase price and whether discounted in any way, location of dwelling, whether new, age of dwelling, type of dwelling, number of habitable rooms, number, sex and age of borrowers, basic income of main borrower, other income and total income on which mortgage is based, whether applicant previously owner occupier, previous tenure.

United Kingdom Lending Rate: Outs: NB: PN: Loan: Fixed data was reported at 3.990 % pa in Oct 2018. This records an increase from the previous number of 3.290 % pa for Sep 2018. United Kingdom Lending Rate: Outs: NB: PN: Loan: Fixed data is updated monthly, averaging 3.750 % pa from Jan 1999 (Median) to Oct 2018, with 238 observations. The data reached an all-time high of 7.600 % pa in Aug 2007 and a record low of 2.030 % pa in Aug 2009. United Kingdom Lending Rate: Outs: NB: PN: Loan: Fixed data remains active status in CEIC and is reported by Bank of England. The data is categorized under Global Database’s United Kingdom – Table UK.M002: Lending Rate: Outstanding.

The effective fixed interest rate of new consumer credit in the United Kingdom (UK) reached over nine 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.

Mortgage interest rates in Europe soared in 2022 and remained elevated in 2023. In many countries, this resulted in interest rates more than doubling. In Denmark, the average mortgage interest rate rose from 0.67 percent in 2021 to 4.98 percent in 2023. 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 will allow mortgage lenders to reduce mortgage interest rates. What is the impact of interest rates on homebuying? 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.

United Kingdom MU: UK Co: Expenditure: Issues of Fixed Interest Security data was reported at 0.000 GBP mn in Jun 2018. This records a decrease from the previous number of 92.000 GBP mn for Jun 2017. United Kingdom MU: UK Co: Expenditure: Issues of Fixed Interest Security data is updated quarterly, averaging 49.000 GBP mn from Mar 1972 (Median) to Jun 2018, with 183 observations. The data reached an all-time high of 1,842.000 GBP mn in Jun 1986 and a record low of 0.000 GBP mn in Jun 2018. United Kingdom MU: UK Co: Expenditure: Issues of Fixed Interest Security data remains active status in CEIC and is reported by Office for National Statistics. The data is categorized under Global Database’s United Kingdom – Table UK.O034: Mergers and Acquisitions: By Source of Funding.

United Kingdom Lending Rate: Outs: PN: Loan: Fixed data was reported at 4.160 % pa in Oct 2018. This records an increase from the previous number of 4.150 % pa for Sep 2018. United Kingdom Lending Rate: Outs: PN: Loan: Fixed data is updated monthly, averaging 4.865 % pa from Jan 1999 (Median) to Oct 2018, with 238 observations. The data reached an all-time high of 7.460 % pa in Dec 2007 and a record low of 3.170 % pa in Dec 2009. United Kingdom Lending Rate: Outs: PN: Loan: Fixed data remains active status in CEIC and is reported by Bank of England. The data is categorized under Global Database’s United Kingdom – Table UK.M002: Lending Rate: Outstanding.

About 1.4 million households with mortgages up for renewal in the United Kingdom (UK) will face increasing monthly costs by the end of 2024 because of the aggressive mortgage interest hikes since the beginning of 2022. For about one million of these households, the increase will be between one British pound and 300 British pounds, while for 388,000 households, the increase will be higher. By December 2026, the number of households with rising mortgage payments is projected at 3.9 million. Meanwhile, about two million mortgage borrowers are expected to benefit from reduced mortgage payments by the end of 2026.

United Kingdom Lending Rate: Outs: NB: Households: PL: Fixed: Over 1 Year data was reported at 6.260 % pa in Sep 2018. This records a decrease from the previous number of 6.920 % pa for Aug 2018. United Kingdom Lending Rate: Outs: NB: Households: PL: Fixed: Over 1 Year data is updated monthly, averaging 9.330 % pa from Jan 1999 (Median) to Sep 2018, with 237 observations. The data reached an all-time high of 12.140 % pa in Jul 2009 and a record low of 6.260 % pa in Sep 2018. United Kingdom Lending Rate: Outs: NB: Households: PL: Fixed: Over 1 Year data remains active status in CEIC and is reported by Bank of England. The data is categorized under Global Database’s United Kingdom – Table UK.M002: Lending Rate: Outstanding.

United Kingdom Lending Rate: Outs: Households: PL: Fixed data was reported at 7.000 % pa in Sep 2018. This records a decrease from the previous number of 7.040 % pa for Aug 2018. United Kingdom Lending Rate: Outs: Households: PL: Fixed data is updated monthly, averaging 9.270 % pa from Jan 1999 (Median) to Sep 2018, with 237 observations. The data reached an all-time high of 10.240 % pa in Mar 2004 and a record low of 6.990 % pa in Jul 2018. United Kingdom Lending Rate: Outs: Households: PL: Fixed data remains active status in CEIC and is reported by Bank of England. The data is categorized under Global Database’s United Kingdom – Table UK.M002: Lending Rate: Outstanding.

The United Kingdom loan market is anticipated to project robust growth in the forecast period because of increasing digitalization,

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