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.

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.

Between January 2018 and May 2025, the United Kingdom's consumer price inflation rate showed notable volatility. The rate hit its lowest point at *** percent in August 2020 and peaked at *** percent in October 2022. By September 2024, inflation had moderated to *** percent, but the following months saw inflation increase again. The Bank of England's interest rate policy closely tracked these inflationary trends. Rates remained low at -* percent until April 2020, when they were reduced to *** percent in response to economic challenges. A series of rate increases followed, reaching a peak of **** percent from August 2023 to July 2024. The central bank then initiated rate cuts in August and November 2024, lowering the rate to **** percent, signaling a potential shift in monetary policy. In February 2025, the Bank of England implemented another rate cut, setting the bank rate at *** percent, which was further reduced to **** percent in May 2025. Global context of inflation and interest rates The UK's experience reflects a broader international trend of rising inflation and subsequent central bank responses. From January 2022 to July 2024, advanced and emerging economies alike increased their policy rates to counter inflationary pressures. However, a shift began in late 2024, with many countries, including the UK, starting to lower rates. This change suggests a potential new phase in the global economic cycle and monetary policy approach. Comparison with other major economies The UK's monetary policy decisions align closely with those of other major economies. The United States, for instance, saw its federal funds rate peak at **** percent in August 2023, mirroring the UK's rate trajectory. Similarly, central bank rates in the EU all increased drastically between 2022 and 2024. These synchronized movements reflect the global nature of inflationary pressures and the coordinated efforts of central banks to maintain economic stability. As with the UK, both the U.S. and EU began considering rate cuts in late 2024, signaling a potential shift in the global economic landscape.

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.; ;

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.; ;

Policy interest rates in the U.S. and Europe are forecasted to decrease gradually between 2024 and 2027, following exceptional increases triggered by soaring inflation between 2021 and 2023. The U.S. federal funds rate stood at **** percent at the end of 2023, the European Central Bank deposit rate at **** percent, and the Swiss National Bank policy rate at **** percent. With inflationary pressures stabilizing, policy interest rates are forecast to decrease in each observed region. The U.S. federal funds rate is expected to decrease to *** percent, the ECB refi rate to **** percent, the Bank of England bank rate to **** percent, and the Swiss National Bank policy rate to **** percent by 2025. An interesting aspect to note is the impact of these interest rate changes on various economic factors such as growth, employment, and inflation. The impact of central bank policy rates The U.S. federal funds effective rate, crucial in determining the interest rate paid by depository institutions, experienced drastic changes in response to the COVID-19 pandemic. The subsequent slight changes in the effective rate reflected the efforts to stimulate the economy and manage economic factors such as inflation. Such fluctuations in the federal funds rate have had a significant impact on the overall economy. The European Central Bank's decision to cut its fixed interest rate in June 2024 for the first time since 2016 marked a significant shift in attitude towards economic conditions. The reasons behind the fluctuations in the ECB's interest rate reflect its mandate to ensure price stability and manage inflation, shedding light on the complex interplay between interest rates and economic factors. Inflation and real interest rates The relationship between inflation and interest rates is critical in understanding the actions of central banks. Central banks' efforts to manage inflation through interest rate adjustments reveal the intricate balance between economic growth and inflation. Additionally, the concept of real interest rates, adjusted for inflation, provides valuable insights into the impact of inflation on the economy.

Interest rate on new mortgages in the United Kingdom decreased to 4.34 percent in June from 4.47 percent in May of 2025. This dataset includes a chart with historical data for the United Kingdom Interest Rate on New Mortgages.

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.

The 10 largest mortgage lenders in the United Kingdom accounted for approximately 81 percent of the total market, with the top three alone accounting for 41 percent in 2023. Lloyds Banking Group had the largest market share of gross mortgage lending, with nearly 36.8 billion British pounds in lending in 2023. HSBC, which is the largest UK bank by total assets, ranked fourth. Development of the mortgage market In 2023, the value of outstanding in mortgage lending to individuals amounted to 1.6 trillion British pounds. Although this figure has continuously increased in the past, the UK mortgage market declined dramatically in 2023, registering the lowest value of mortgage lending since 2015. In 2020, the COVID-19 pandemic caused the market to contract for the first time since 2012. The next two years saw mortgage lending soar due to pent-up demand, but as interest rates soared, the housing market cooled, leading to a decrease in new loans of about 100 billion British pounds. The end of low interest rates In 2021, mortgage rates saw some of their lowest levels since recording began by the Bank of England. For a long time, this was particularly good news for first-time homebuyers and those remortgaging their property. Nevertheless, due to the rising inflation, mortgage rates started to rise in the second half of the year, resulting in the 10-year rate doubling in 2022.

United Kingdom Lending Rate: Outs: Households: Personal Loan (PL) data was reported at 8.240 % pa in Mar 2025. This records a decrease from the previous number of 8.290 % pa for Feb 2025. United Kingdom Lending Rate: Outs: Households: Personal Loan (PL) data is updated monthly, averaging 7.590 % pa from Jan 1999 (Median) to Mar 2025, with 315 observations. The data reached an all-time high of 12.190 % pa in Jan 1999 and a record low of 5.410 % pa in Apr 2021. United Kingdom Lending Rate: Outs: Households: Personal Loan (PL) 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. [COVID-19-IMPACT]

Building society revenue is anticipated to grow at a compound annual rate of 27.4% over the five years through 2025-26 to £51.7 billion, including estimated growth of 2.7% in 2025-26. Building societies have benefitted from an influx of re-mortgaging activity, as homeowners have sought to lock in lower rates before expected interest rate rises. However, societies faced challenging operating conditions, including intense competition from other financial institutions like retail banks. Following the COVID-19 outbreak, the Bank of England underwent aggressive rate hikes, aiding interest income. Despite the growing base rate environment feeding through to elevated mortgage rates, the residential property market proved resilient for most of 2022-23, resulting in building societies reporting huge boosts to their net interest income. In 2023-24, rates continued to rise, lifting revenue growth further despite intensifying mortgage price competition. However, deposit costs picked up during the year, placing downward pressure on net interest income and profitability. Yet, revenue continued to skyrocket thanks to healthy interest income from mortgage lending in the higher base rate environment. In 2024-25, sticky inflation resulted in interest rates staying higher for longer, aiding revenue growth. However, rate cuts did occur as inflation normalised, contributing to a slower rate of revenue growth, which was partially offset by a healthy housing market. In 2025-26, revenue is set to continue growing as mortgage lending gathers momentum, with buyers making the most of lower borrowing costs. However, a declining base rate will continue to erode interest income and further slow revenue in 2025-26. Building society revenue is anticipated to grow at a compound annual rate of 2.5% over the five years through 2029-30 to reach £58.5 billion. The UK housing market will continue to grow thanks to lower borrowing costs and aid interest income in the coming years through healthier mortgage lending. Revenue growth will disperse outside of the capital in regions like the North West, Yorkshire and the West Midlands due to the government's levelling up agenda and private multinationals expanding their presence elsewhere.

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.

Mortgage credit interest rate, percent in Royaume-Uni, avril, 2025 Pour cet indicateur, Bank of England fournit des données pour la Royaume-Uni de janvier 2004 à avril 2025. La valeur moyenne pour Royaume-Uni pendant cette période était de 3.58 pour cent avec un minimum de 1.59 pour cent en novembre 2021 et un maximum de 6.11 pour cent en septembre 2008. | TheGlobalEconomy.com

United Kingdom UK: Risk Premium on Lending: Lending Rate Minus Treasury Bill Rate data was reported at 0.120 % pa in 2014. This records a decrease from the previous number of 0.199 % pa for 2013. United Kingdom UK: Risk Premium on Lending: Lending Rate Minus Treasury Bill Rate data is updated yearly, averaging 0.280 % pa from Dec 1967 (Median) to 2014, with 48 observations. The data reached an all-time high of 1.995 % pa in 1972 and a record low of -2.372 % pa in 1974. United Kingdom UK: Risk Premium on Lending: Lending Rate Minus Treasury Bill 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. Risk premium on lending is the interest rate charged by banks on loans to private sector customers minus the 'risk free' treasury bill interest rate at which short-term government securities are issued or traded in the market. In some countries this spread may be negative, indicating that the market considers its best corporate clients to be lower risk than the government. The terms and conditions attached to lending rates differ by country, however, limiting their comparability.; ; International Monetary Fund, International Financial Statistics database.; ;

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.

Over the five years through 2025-26, UK banks' revenue is expected to climb at a compound annual rate of 4.8% to £136 billion, including an anticipated hike of 3.6% in 2025-26. After the financial crisis in 2007-08, low interest rates limited banks' interest in loans, hitting income. At the same time, a stricter regulatory environment, including increased capital requirements introduced under the Basel III banking reforms and ring-fencing regulations, constricted lending activity. To protect their profitability, banks like Lloyds have shut the doors of many branches and made substantial job cuts. Following the COVID-19 outbreak, the Bank of England adopted aggressive tightening of monetary policy, hiking interest rates to rein in spiralling inflation. The higher base rate environment lifted borrowing costs, driving interest income for banks, which reported skyrocketing profits in 2023-24. Although profit grew markedly, pressure to pass on higher rates to savers and fierce competition weighed on revenue growth at the tail end of the year. However, the prospect of rate cuts in 2024-25 saw many banks lower their savings rates, aiding revenue growth. In 2025-26, although further interest rate cuts are on the horizon, revenue is set to grow, due to lower borrowing costs driving activity in the housing market. Banks have also reduced their exposure to interest rate cuts through structural hedges, which lock in rates when they fluctuate. The FCA’s investigation into motor commissions has been a cause for concern over recent years, with banks like Lloyds and Santander ramping up provisions over 2024-25 in preparation for large payouts, if the Supreme Court deems banks were carrying out illegal activities. Over the five years through 2030-31, industry revenue is forecast to swell at a compound annual rate of 4% to reach £165.8 billion. Regulatory restrictions, tougher stress tests and stringent lending criteria will also hamper revenue growth. Competition is set to remain fierce – both internally from lenders that deliver their services exclusively via digital channels and externally from alternative finance providers, like peer-to-peer lending platforms. The possibility of legislation like the Edinburgh reforms will drive investment and lending activity in the coming years, if introduced. However, concerns surrounding the repercussions of less stringent capital requirements and the already fragile nature of the UK financial system pose doubt as to whether any significant changes will be made.

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.