What are the current UK mortgage rates?

Adapted from a Rightmove Property News article January 9, 2025

If you’re thinking about buying a home, you might be wondering what the current mortgage rates are in the UK.

Lenders change the rates of their mortgage products regularly. That’s why we update the average mortgage rates weekly and compare how they’ve changed since the previous week. You can also compare the rates across a range of loan to value (LTV) percentages.

What’s happening with mortgage and interest rates now?

There has been lots of news about Base Rate rises and how they can impact mortgage rates. The Bank of England (BoE) meet about every six weeks to decide whether the Base Rate should go up or down, or stay the same.

The Base Rate was held at 4.75% on 19 December. However, inflation has climbed above the Bank of England’s target of 2% in November, rising to 2.6%.

Here is an example - average rates for 2-year and 5-year fixed-rate mortgages

Term    Average rate     Weekly change Yearly change

2-year fixed       5.03%  -0.03%              -0.14%

5-year fixed       4.79%  -0.01%              -0.07%

Updated: 09 Jan 2025 These rates are provided by Podium and are an average based on 95% of the mortgage market. All rates are based on products with a circa £999 fee.

When could mortgage rates start to drop?

It is widely expected that the Base Rate will be held at 4.75% in January, with more cuts forecast in 2025. By Autumn 2025, it could fall to about 4%, although this depends on what’s happening in the wider economy.

But it’s difficult to predict when we could start to see more sizeable drops in mortgage rates, mostly because their movement is dependent on several factors. Including what happens with inflation, falling swap rates, and no unexpected shocks to the economy.

Average monthly mortgage repayments by average house price

You might be wondering what this week’s average mortgage rates could mean for average monthly mortgage repayments, and how this compares to the average rates offered last week.

The current average asking price of a typical first-time buyer property is £225,086. For someone taking out an average five-year fixed, 85% LTV mortgage, the average monthly mortgage repayment on this type of home is now £1,097 per month if repaying over 25 years, compared with £1,096 per month a year ago (when the average first-time buyer property asking price was lower, at £219,984).

Source: Rightmove House Price Index and Podium data

How much can you borrow with a mortgage?

The amount you can borrow with a mortgage is determined by an affordability assessment and your interest rate is determined by the amount of deposit you have, otherwise known as loan-to-value (LTV).

LTV is expressed as a percentage, and it reflects the size of the mortgage you need as a proportion of the value of the home you want to buy. The bigger the deposit you have, the lower the LTV, and vice-versa.

The header image for this article was provided courtesy of William H. Brown, Fakenham.

Please note: Your home may be repossessed if you do not keep up repayments on the mortgage.

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