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.

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.

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.

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.

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 gross monthly mortgage lending of building societies in the UK between 2017 and 2023 ranged from ************* British pounds and ********** British pounds. In September 2023, the value of gross lending stood at nearly *** billion British pounds - a decline of more than *** billion British pounds from the same month in 2022. The fluctuation in lending can also be seen in the number of mortgage loan approvals.Building societies, unlike banks, are not listed on the stock market and thus, don't have external shareholders. Instead, the "owners" and decision makers of building societies are mortgage borrowers, savers and current account holders. Building societies offer many traditional banking products and financial services such as mortgage lending, savings and current accounts.

Building societies, unlike banks, are not listed on the stock market and thus, don't have external shareholders. Instead, the shareholders and decision makers of building societies are the investing members. Building societies offer many traditional banking products and financial services such as mortgage lending, savings, and current accounts. In September 2022, the value of mortgages outstanding by building societies amounted to approximately 367 billion British pounds.

Mortgage lending by building societies in the United Kingdom (UK)

After a year of lower lending activity due to the coronavirus (COVID-19) crisis, in March 2021, the monthly value of residential mortgage lending by building societies in the UK reached record high levels. The fluctuation in lending can also be seen in the number of mortgage loan approvals.

Mortgage lending in the UK

The UK is one of the biggest residential mortgage markets in Europe, worth almost 1.7 trillion euros. Building societies rank among the largest mortgage lenders by market share together with the leading UK banks. In 2019, the largest building society and second largest lender in the UK was Nationwide BS.

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 5.5 percent.

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.

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.

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.