Latest Update on UK Mortgage Rates: To find the best mortgage deal, borrowers need to act quickly if they want to remortgage or get a home loan.
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A slowing economy led mortgage lenders to start cutting rates at the tail-end of 2023 in anticipation of the Bank of England cutting the base rate early in the New Year.
Despite this, markets are now expecting an interest rate cut towards the middle of the year rather than the beginning, and economic uncertainty has raised swap rates, prompting lenders to begin raising their pricing again.
As borrowers rush to lock in lower rates, even the best deals aren’t sticking around for long.
Residential Mortgage Rates
| Deal type and length | The current average rate across all lenders | The current average rate across Big Six lenders |
|---|---|---|
| 2-year fixed-rate (75% LTV) | 5.74% | 4.99% |
| 5-year fixed-rate (75% LTV) | 5.24% | 4.63% |
| 2-year variable rate (75% LTV) | 5.84% | 5.75% |
| Standard variable rate (SVR) | 8.54% | 7.5% |
Note that the above rates are not necessarily indicative of the rate you would receive.
Generally, the bigger the deposit, the lower the loan-to-value (LTV), which allows you to gain access to better rates since lenders view you as less risky.
A whole-of-market mortgage broker can help you find the right current mortgage rate in the current climate by comparing mortgages.
Latest Update on UK Mortgage Rates: Current Buying Mortgage Rates
| Deal type and length | Range of lenders | Current average rate | Current lowest rate |
|---|---|---|---|
| 2-year fixed-rate mortgage (75% LTV) | Across all lenders | 5.69% | 3.79% |
| 2-year fixed-rate mortgage (75% LTV) | Across big 6 lenders | 5.31% | 4.64% |
On 1 February, the Bank of England held the Bank Rate at 5.25% – the rate has been frozen since it soared to its current 15-year high in August.
Markets and consumers hope interest rates have peaked, at least for now. But what will happen to Bank Rate and mortgage rates in 2024?
What is the latest mortgage rate in the UK?
It means many more borrowers will experience a big payment shock when they remortgage in 2024 since mortgage rates remain higher than they’ve been in recent history.
When around 900,000 borrowers come off much lower fixed rate deals this year, their monthly mortgage repayments are expected to rise by over £500, according to the Bank of England’s Financial Stability Report published on 6 December. Approximately 20% of these homeowners may see a monthly increase in excess of $1,000.
Having fixed their rate at around 2% two years ago, they will face around 5% when they switch to a new deal when the current one expires.
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Could the rates fall further?
Fixed mortgage rates declined towards the end of 2023, but several lenders increased rates on selected mortgage products in March 2024, indicating that the market is still very volatile.
In order to combat rising inflation, the Bank of England raised the base rate 14 times in a row from the end of 2021 until August 2023.
On 9 April 2024, the Bank of England will decide whether to raise the base rate.
In addition to the base rate, other factors, such as swap rates and a lender’s discretion, affect the rates on other types of mortgages.
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Latest Update on UK Mortgage Rates: Predictions
In December, the annual rate of price increases increased to 4%, according to the Bank of England governor.
According to S&P Global Ratings, interest rates will not be cut until the second half of next year, which means mortgage rates will not fall significantly until then.
Bank trade body UK Finance says affordability pressures are peaking now and things will begin to improve in 2025.
Capital Economics’ chief UK economist, Paul Dales, thinks the recession will be shallower and growth will remain weak through 2024, but the Bank of England will have more time to cut rates.
Despite low inflation, Nationwide’s chief economist Robert Gardner says consumer confidence and new buyer inquiries are still low.
Mortgage rates will slow down in 2024, according to Better.co.uk. The Bank of England may lower the Bank Rate by the end of 2024.
London & Country Mortgages associate director David Hollingworth says five-year fixed rates are below 4.50% and two-year fixed rates are below 5%.
According to the leading house price indices, which each record national prices separately on a monthly basis, property prices have fallen by 1% to 2% over the past year.
As a result of rising mortgage rates, the market has seen falling prices and properties taking longer to sell.
If mortgage rates rise, what should I do?
Consider these options if you’re concerned about your mortgage interest rate rising:
If your current mortgage deal has not ended, however, be aware of any early repayment charges (ERCs).
In the next six months, you can lock in a new rate and switch when your deal ends. If rates fall before your deal ends, you can switch again.
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What effect does the Bank of England base rate have on mortgage rates today?
The Bank of England manages inflation with its base rate. Low inflation makes loans more affordable, so the Bank of England lowers the base rate. The Bank of England raises its base rate to reduce inflation.
Depending on your deal, base rate changes affect your mortgage rate. Rates on tracker mortgages go up and down with the base rate.
Discount mortgages and SVRs aren’t directly linked to the base rate, but they’re influenced by it, so they can go up or down.
When you’re on a fixed-rate mortgage, your rate will remain the same for the duration of that mortgage. Base rate changes can affect what fixed-rate mortgages are available.
The changes in the base rate only affect tracker mortgage rates, but they also affect other deals offered by lenders.
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