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.

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.

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.

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.

The average mortgage interest rate decreased in nearly every country in Europe between 2012 and 2021, followed by an increase in response to inflation. In Hungary, Poland, Czechia, and Romania, mortgage rates peaked in late 2022 and the beginning of 2023, followed by a gradual decline until the first quarter of 2024. The rest of the countries under observation, including the biggest mortgage markets - the UK and Germany, saw a continued increase in interest rates until the fourth quarter of 2023. In the first quarter of 2024, mortgage interest rates declined quarter-on-quarter across almost all markets in focus, marking a long awaited easing of monetary policy.

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.

This dataset provides values for MORTGAGE RATE reported in several countries. The data includes current values, previous releases, historical highs and record lows, release frequency, reported unit and currency.

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.

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.

Bank Lending Rate in the United Kingdom remained unchanged at 8.50 percent in February. This dataset provides - United Kingdom Prime Lending Rate - actual values, historical data, forecast, chart, statistics, economic calendar and news.

Average weekly household expenditure on goods and services in the UK. Data are shown by region, age, income (including equivalised) group (deciles and quintiles), economic status, socio-economic class, housing tenure, output area classification, urban and rural areas (Great Britain only), place of purchase and household composition.

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 0.1 percent. This historic low came just one week after the Bank of England cut rates from 0.75 percent to 0.25 percent in a bid to prevent mass job cuts in the United Kingdom. It remained at 0.1 percent until December 2021 and was increased to one percent in May 2022 and to 2.25 percent in October 2022. After that, the bank rate increased almost on a monthly basis, reaching 5.25 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.

For the past decade, buying a home in the UK has been more affordable than renting one, when only considering the monthly costs. The renting versus buying gap fluctuated during the period and in 2016, it reached its highest value of 131 British pounds. In 2023, the monthly costs for a first-time buyer were 1,231 British pounds, compared to 1,258 British pounds for renters. Rental growth vs house price growth Housing costs in the UK have been on an uprise, with both renting and buying a home increasingly unreachable. Though the monthly costs of buying have consistently been lower in the past decade, house price growth has been much stronger than rental growth since the beginning of the pandemic. Additionally, buyers have been affected by the aggressive mortgage rate hikes, making acquiring their first home even less affordable. Barriers to homeownership Buying a home is not straightforward. For younger (18-40) potential first-time buyers, there are a number of barriers. Approximately one in three first-time buyers point out that raising a deposit was the main obstacle. Other reasons stopping buyers were not being able to take out a mortgage on their current income and poor credit ratings. Unsurprisingly, the highest share of people who buy a home with a mortgage was in the age group of 45 to 55-year-olds.

Housing affordability in the UK has worsened notably since 2020, with the share of income spent on mortgage rising for first-time and repeat buyers. In 2023, homebuyers spent, on average, 20.6 percent of their income on mortgage payments, 4.4 percentage points higher than in 2020. This increase was higher for first-time buyers than for repeat buyers. House prices have soared since the COVID-19 pandemic, followed by a dramatic increase in interest rates. As fewer people can afford to buy a home, the number of mortgage approvals for house purchase has dropped.

United Kingdom Retail Price Index: Excludes Mortgage Interest & Council Tax data was reported at 282.000 13Jan1987=100 in Oct 2018. This records an increase from the previous number of 281.700 13Jan1987=100 for Sep 2018. United Kingdom Retail Price Index: Excludes Mortgage Interest & Council Tax data is updated monthly, averaging 153.950 13Jan1987=100 from Jan 1975 (Median) to Oct 2018, with 526 observations. The data reached an all-time high of 282.000 13Jan1987=100 in Oct 2018 and a record low of 31.500 13Jan1987=100 in Jan 1975. United Kingdom Retail Price Index: Excludes 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 United Kingdom – Table UK.I011: Retail Price Index.

Abstract copyright UK Data Service and data collection copyright owner.

The 5% Sample Survey of Building Society Mortgage Completions (BSM) has been in existence since 1965. The Archive holds data from 1974.
Monthly returns, giving detailed information on a nominal 5% sample of all mortgage completions, have been submitted on a voluntary basis by most building societies to the Department of Environment who process the data on a quarterly basis.
The survey results have served as the offical source of statistics on the owner-occupied housing market, providing a wealth of information on mortgage advances, dwelling prices and the characteristics of borrowers and properties.
An increased share of the mortgage market being accounted for by other lenders and a widening range of mortgage products during the 1980s have necessitated change, leading to the BSM being succeeded by the Survey of Mortgage Lenders (SML) in 1992 (see GN: 33254).
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:
Building Society code, date mortgage completed, whether dwelling is wholly or partly occupied by borrower. Mortgage amount, whether solely for purchase of property, period of mortgage, gross rate of interest, repayment method. Purchase price and whether discounted in any way. Location of dwelling, whether new, age of dwelling, type, number of habitable rooms, whether garage, rateable value. Number and sex of borrowers, age of main borrower, basic income, other income, total income, whether applicant previously owner occupier, previous tenure, whether main borrower nominated by LA under support lending scheme.