Mortgage interest rates in the UK were on a downward trend for more than a decade before soaring in 2022. In the first quarter of 2025, the average weighted interest rate stood at **** percent — nearly ***** times the interest rate in the first quarter of 2022. 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 over ** billion euros in gross residential mortgage lending as of the fourth quarter of 2024. When comparing the total outstanding residential mortgage lending, the UK also ranks first with about *** trillion euros.

Mortgage rates surged at an unprecedented pace in 2022, with the average 10-year fixed rate doubling between March and December of that year. In response to mounting inflation, the Bank of England implemented a series of rate hikes, pushing borrowing costs steadily higher. By October 2025, the average 10-year fixed mortgage rate stood at **** percent. As financing becomes more expensive, housing demand has cooled, weighing on market sentiment and slowing house price growth. How have the mortgage hikes affected the market? After surging in 2021, the number of residential properties sold fell significantly in 2023, dipping to just above *** million transactions. This contraction in activity also dampened mortgage lending. Between the first quarter of 2023 and the first quarter of 2024, the value of new mortgage loans declined year-on-year for five consecutive quarters. Even as rates eased modestly in 2024 and housing activity picked up slightly, volumes remained well below the highs recorded in 2021. How are higher mortgages impacting homebuyers? For homeowners, the impact is being felt most acutely as fixed-rate deals expire. Mortgage terms in the UK typically range from two to ten years, and many borrowers who locked in historically low rates are now facing significantly higher repayments when refinancing. By the end of 2026, an estimated five million homeowners will see their mortgage deals expire. Roughly two million of these loans are projected to experience a monthly payment increase of up to *** British pounds by 2026, putting additional pressure on household budgets and constraining affordability across the market.

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 May 2025, 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 percent. This dataset provides - United Kingdom Interest Rate - actual values, historical data, forecast, chart, statistics, economic calendar and news.

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.

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 2025, 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 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.

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.

This statistic shows the annual growth rates of credit card lending carried out by the United Kingdom leading high-street banks from 2010 to 2017 (figures for June of respective years, calculated change year-on-year). As of June 2017, the growth rate stood at *** percent.

United Kingdom Lending Rate: Outs: MFIs data was reported at 0.750 % pa in Sep 2018. This records an increase from the previous number of 0.740 % pa for Aug 2018. United Kingdom Lending Rate: Outs: MFIs data is updated monthly, averaging 0.500 % pa from Jan 2004 (Median) to Sep 2018, with 177 observations. The data reached an all-time high of 0.770 % pa in Jun 2010 and a record low of 0.230 % pa in Apr 2017. United Kingdom Lending Rate: Outs: MFIs 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.

This statistic shows the proportion of new mortgages in the United Kingdom with no fees between 2011 and 2017. The graph shows that there has been an overall year on year rise in the proportion of no fee mortgages given. In 2011, **** percent of mortgages had no fees as to ***** percent in 2017.

United Kingdom Lending Rate: Outs: Public Sector data was reported at 4.400 % pa in Sep 2018. This records a decrease from the previous number of 4.460 % pa for Aug 2018. United Kingdom Lending Rate: Outs: Public Sector data is updated monthly, averaging 4.390 % pa from Jan 1999 (Median) to Sep 2018, with 237 observations. The data reached an all-time high of 8.190 % pa in Jan 1999 and a record low of 3.370 % pa in Oct 2017. United Kingdom Lending Rate: Outs: Public Sector 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.

United Kingdom Lending Rate: Outs: NB: Households: MG: Floating data was reported at 2.020 % pa in Sep 2018. This records an increase from the previous number of 1.930 % pa for Aug 2018. United Kingdom Lending Rate: Outs: NB: Households: MG: Floating data is updated monthly, averaging 3.280 % pa from Jan 1999 (Median) to Sep 2018, with 237 observations. The data reached an all-time high of 6.100 % pa in Aug 2007 and a record low of 1.720 % pa in Oct 2017. United Kingdom Lending Rate: Outs: NB: Households: MG: Floating 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.

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.

This statistic shows the amount owed to banks in consumer credit lending in the United Kingdom (UK) as of the end of March 2017. In total ** billion British pounds are owed to either bank or non-bank institutions for dealership car financing. In total ** billion is owed in credit card lending and ** billion British pounds in personal loans, overdrafts and other lending.

This statistic shows the amount of mortgage completions carried out through the Help to Buy governmental guarantee scheme in the United Kingdom (UK) between ************ and *********, listed by property type. With almost **** thousand cases, the majority of mortgage completions via the scheme related to terrace houses properties.

In 2022, house price growth in the UK slowed, after a period of decade-long increase. Nevertheless, in June 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.