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.

Graph and download economic data for Consumer Price Index: Retail price Index: All Items Less Mortgage Interest Rate for the United Kingdom (CPRPTT02GBQ661N) from Q1 1975 to Q4 2017 about mortgage, United Kingdom, all items, retail, CPI, interest rate, interest, housing, rate, price index, indexes, and price.

This statistic shows the annual growth rates of mortgage and lending by the United Kingdom (UK) leading high-street banks from 2010 to 2017 (year-on year change, data for June of respective years). As of June 2017, it can be seen that the growth rate stood at 2.6 percent.

The value of mortgage approvals in the UK started to increase in the final quarter of 2023, reaching 22.7 billion British pounds in September 2024. In recent years, the market has undergone significant fluctuations, including a dramatic decline in May 2020 because of the COVID-19 pandemic and two notable drops in 2023, attributable to the aggressive mortgage interest rate hikes and worsening economic conditions.

Following the COVID-19 pandemic in 2020, the number of residential mortgage approvals in the UK plummeted. As the measures eased, the market rebounded, peaking at ******* mortgage approvals in November 2020. In 2022 and 2023, mortgage lending declined again as a response to the rising mortgage interest rates and the cooling of the housing market. In September 2024, the number of mortgage approvals exceeded ******* - up from about ****** in the same month a year ago. The increase indicated a rise in mortgage demand and an improvement in consumer sentiment.

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 rates in the Netherlands increased sharply in 2022 and 2023, after declining gradually between 2008 and 2021. In December 2022, the average interest rate for new mortgage loans stood at **** percent, and by the end of 2023, it had risen to **** percent. The 10-year interest rate was the lowest, at **** percent; the floating and less than one-year interest rates amounted to **** and **** percent, respectively. In early 2024, mortgage rates decreased notably. Are mortgage rates in the Netherlands different from those in other European countries? When comparing this ranking to data that covers multiple European countries, the Netherlands’ mortgage rate was similar to the rates found in Spain, the United Kingdom, and Sweden. It was, however, a lot lower than the rates in Eastern Europe. Hungary and Romania, for example, had some of the highest mortgage rates. For more information on the European mortgage market and how much the countries differ from each other, please visit this dedicated research page. How big is the mortgage market in the Netherlands? The Netherlands has overall seen an increase in the number of mortgage loans sold and is regarded as one of the countries with the highest mortgage debt in Europe. The reason behind this is that Dutch homeowners were able to for many years to deduct interest paid from pre-tax income (a system known in the Netherlands as hypotheekrenteaftrek). Total mortgage debt of Dutch households has been increasing year-on-year since 2013.

United Kingdom Retail Price Index: Weights: excl Mortgage Interest & Depreciation data was reported at 893.000 Per 1000 in 2018. This records an increase from the previous number of 891.000 Per 1000 for 2017. United Kingdom Retail Price Index: Weights: excl Mortgage Interest & Depreciation data is updated yearly, averaging 917.000 Per 1000 from Dec 1987 (Median) to 2018, with 32 observations. The data reached an all-time high of 958.000 Per 1000 in 1988 and a record low of 885.000 Per 1000 in 2008. United Kingdom Retail Price Index: Weights: excl Mortgage Interest & Depreciation 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.I012: Retail Price Index: Weights.

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.

Retail Price Index: Weights: Housing: Mortgage Interest Payments data was reported at 24.000 Per 1000 in 2018. This records a decrease from the previous number of 25.000 Per 1000 for 2017. Retail Price Index: Weights: Housing: Mortgage Interest Payments data is updated yearly, averaging 40.500 Per 1000 from Dec 1975 (Median) to 2018, with 44 observations. The data reached an all-time high of 76.000 Per 1000 in 1991 and a record low of 23.000 Per 1000 in 1978. Retail Price Index: Weights: Housing: Mortgage Interest Payments data remains active status in CEIC and is reported by Office for National Statistics. The data is categorized under Global Database’s UK – Table UK.I012: Retail Price Index: Weights.

United Kingdom Retail Price Index: Weights: excl Mortgage Interest & Council Tax data was reported at 938.000 Per 1000 in 2018. This records an increase from the previous number of 936.000 Per 1000 for 2017. United Kingdom Retail Price Index: Weights: excl Mortgage Interest & Council Tax data is updated yearly, averaging 925.000 Per 1000 from Dec 1987 (Median) to 2018, with 32 observations. The data reached an all-time high of 938.000 Per 1000 in 2018 and a record low of 877.000 Per 1000 in 1991. United Kingdom Retail Price Index: Weights: excl Mortgage Interest & Council Tax data remains active status in CEIC and is reported by Office for National Statistics. The data is categorized under Global Database’s UK – Table UK.I012: Retail Price Index: Weights.

The mortgage market has recovered well since the financial crisis, often producing double-digit growth each year. However, rising economic uncertainties will dampen the prospects for future growth over the coming years. During the forecast period (2018-22), gross advances are expected to record a compound annual growth rate (CAGR) of 4.2%, reaching £338bn by the end of the forecast period versus a historic five-year CAGR of 7.6% from 2013 to 2017. Read More

United Kingdom Retail Price Index: Excludes Mortgage Interest & Indirect Taxes data was reported at 250.200 13Jan1987=100 in Jan 2017. This records a decrease from the previous number of 252.300 13Jan1987=100 for Dec 2016. United Kingdom Retail Price Index: Excludes Mortgage Interest & Indirect Taxes data is updated monthly, averaging 165.400 13Jan1987=100 from Jan 1987 (Median) to Jan 2017, with 361 observations. The data reached an all-time high of 252.300 13Jan1987=100 in Dec 2016 and a record low of 100.000 13Jan1987=100 in Jan 1987. United Kingdom Retail Price Index: Excludes Mortgage Interest & Indirect Taxes 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.I011: Retail Price Index.

商品零售价格指数：不包括抵押利息和间接税在01-01-2017达250.2001987年1月13日=100，相较于12-01-2016的252.3001987年1月13日=100有所下降。商品零售价格指数：不包括抵押利息和间接税数据按月更新，01-01-1987至01-01-2017期间平均值为165.4001987年1月13日=100，共361份观测结果。该数据的历史最高值出现于12-01-2016，达252.3001987年1月13日=100，而历史最低值则出现于01-01-1987，为100.0001987年1月13日=100。CEIC提供的商品零售价格指数：不包括抵押利息和间接税数据处于定期更新的状态，数据来源于Office for National Statistics，数据归类于全球数据库的英国 – 表 UK.I011：商品零售价格指数。

House prices in the UK rose dramatically during the coronavirus pandemic, with growth slowing down in 2022 and turning negative in 2023. The year-on-year annual house price change peaked at 14 percent in July 2022. In April 2025, house prices increased by 3.5 percent. As of late 2024, the average house price was close to 290,000 British pounds. Correction in housing prices: a European phenomenon The trend of a growing residential real estate market was not exclusive to the UK during the pandemic. Likewise, many European countries experienced falling prices in 2023. When comparing residential property RHPI (price index in real terms, e.g. corrected for inflation), countries such as Germany, France, Italy, and Spain also saw prices decline. Sweden, one of the countries with the fastest growing residential markets, saw one of the largest declines in prices. How has demand for UK housing changed since the outbreak of the coronavirus? The easing of the lockdown was followed by a dramatic increase in home sales. In November 2020, the number of mortgage approvals reached an all-time high of over 107,000. One of the reasons for the housing boom were the low mortgage rates, allowing home buyers to take out a loan with an interest rate as low as 2.5 percent. That changed as the Bank of England started to raise the base lending rate, resulting in higher borrowing costs and a decline in homebuyer sentiment.

The share of of the landlords in the United Kingdom (UK) who were planning to sell properties from their portfolio in the coming 12 months hit 42 percent percent in the third quarter of 2023. Meanwhile, the share of landlords looking to expand their portfolio, stood at 10 percent. The shift in sentiment in the beginning of 2021 can be explained with the increase in mortgage rates and the dramatic growth in house prices since the beginning of the pandemic.

In 2022, house price growth in the UK slowed, after a period of decade-long increase. Nevertheless, in March 2025, prices reached a new peak, with the average home costing ******* British pounds. This figure refers to all property types, including detached, semi-detached, terraced houses, and flats and maisonettes. Compared to other European countries, the UK had some of the highest house prices. How have UK house prices increased over the last 10 years? Property prices have risen dramatically over the past decade. According to the UK house price index, the average house price has grown by over ** percent since 2015. This price development has led to the gap between the cost of buying and renting a property to close. In 2023, buying a three-bedroom house in the UK was no longer more affordable than renting one. Consequently, Brits have become more likely to rent longer and push off making a house purchase until they have saved up enough for a down payment and achieved the financial stability required to make the step. What caused the recent fluctuations in house prices? House prices are affected by multiple factors, such as mortgage rates, supply, and demand on the market. For nearly a decade, the UK experienced uninterrupted house price growth as a result of strong demand and a chronic undersupply. Homebuyers who purchased a property at the peak of the housing boom in July 2022 paid ** percent more compared to what they would have paid a year before. Additionally, 2022 saw the most dramatic increase in mortgage rates in recent history. Between December 2021 and December 2022, the **-year fixed mortgage rate doubled, adding further strain to prospective homebuyers. As a result, the market cooled, leading to a correction in pricing.

The are several factors that can accumulate in the repossession of a home, the most common reason for being mortgage arrears. This occurs when borrowers can no longer make the mortgage repayments. Mortgage lenders will repossess the home to sell to recover the money owed. In 2023, between 176 and 424 homes in England were repossessed monthly. In Wales, this figure ranged between 14 and 32. Which regions saw the most repossessions? The North West recorded the highest number of repossessions in 2023. Conversely, the East of England, South West, East Midlands, and Wales had the lowest number of repossessions. London and South East, the regions with the highest average earnings, ranked in the middle. Mortgage arrears on the rise Mortgage arrears in the UK have increased quarter-on-quarter since the third quarter of 2022, showing that homebuyers are increasingly struggling to meet their monthly obligations. Borrowers who missed a mortgage payment were highly likely to also fall behind on other financial commitments, with credit card debt being the most common one.

In June 2024, the European Central Bank (ECB) began reducing its fixed interest rate for the first time since 2016, implementing a series of cuts. The rate decreased from 4.5 percent to 3.15 percent by year-end: a 0.25 percentage point cut in June, followed by additional reductions in September, October, and December. The central bank implemented other cuts in early 2025, setting the rate at 2.4 percent in April 2025. This marked a significant shift from the previous rate hike cycle, which began in July 2022 when the ECB raised rates to 0.5 percent and subsequently increased them almost monthly, reaching 4.5 percent by December 2023 - the highest level since the 2007-2008 global financial crisis. How does this ensure liquidity? Banks typically hold only a fraction of their capital in cash, measured by metrics like the Tier 1 capital ratio. Since this ratio is low, banks prefer to allocate most of their capital to revenue-generating loans. When their cash reserves fall too low, banks borrow from the ECB to cover short-term liquidity needs. On the other hand, commercial banks can also deposit excess funds with the ECB at a lower interest rate. Reasons for fluctuations
The ECB’s primary mandate is to maintain price stability. The Euro area inflation rate is, in theory, the key indicator guiding the ECB's actions. When the fixed interest rate is lower, commercial banks are more likely to borrow from the ECB, increasing the money supply and, in turn, driving inflation higher. When inflation rises, the ECB increases the fixed interest rate, which slows borrowing and helps to reduce inflation.