Navigating the Current Mortgage Landscape: UK Interest Rates and Market Trends



The Insider @ Houst
Last updated on
June 30, 2023

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Navigating the Current Mortgage Landscape: UK Interest Rates and Market Trends

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The Bank of England increased interest rates from 4.5% to 5% in June. This significant increase of 0.50 percentage points caused concerns, given that inflation in May was 8.7%, surpassing the government's target by over four times.

The latest rate hike in June represents the 13th adjustment since December 2021, when the Bank rate was a mere 0.1%. So, the current Bank Rate is at its highest since 2008. Undoubtedly, this decision has further intensified the financial burden of borrowing money.

In this article, we will look at the current average mortgage interest rates UK. So, let’s get into it! 

Table of Contents

Exploring Current Mortgage Rates in the UK

Exploring Current Mortgage Rates in the UK

Current mortgage rates in the UK (as of 26 June 2023)

  • Average Two-Year Fixed-Rate Mortgage: 6.44% (75% LTV)
  • Average Five-Year Fixed-Rate Mortgage: 5.79% (75% LTV)
  • Average Two-Year Variable-Rate Mortgage: 5.59% (75% LTV)
  • Average Standard Variable Rate (SVR): 8.25%

Volatility and Uncertainty in Mortgage Rates

Following last September's mini-Budget, the mortgage market experienced significant turbulence and uncertainty. This led to a surge in mortgage rates as market instability caused the pound's value to plummet to historic lows. In response, major lenders such as NatWest, Barclays, Halifax, and Virgin Money withdrew their mortgage deals temporarily, only to reintroduce them later at higher prices.

Although mortgage costs have undergone some adjustments since then, lenders have gradually increased their deals' prices. This trend can be attributed to the relentless climb of the Bank rate during persistently high inflation. As a result, borrowers face ongoing challenges in finding favourable mortgage terms in this shifting landscape.

What Can You Expect for Average Mortgage Interest Rates in UK?

The mortgage interest rate you can get depends on the type of mortgage, your financial situation, and your deposit size. Generally, a larger deposit results in a lower loan-to-value (LTV) ratio, which often means better interest rates.

Moreover, mortgage interest rates UK can vary depending on the mortgage product you opt for. Fixed-rate mortgages may have higher initial rates but offer rate stability throughout the deal. On the other hand, variable-rate mortgages might start with lower rates but can fluctuate throughout your agreement.

In the current volatile mortgage market, rates are subject to regular changes. It is advisable to consult a whole-of-market mortgage broker who can assess your requirements and compare available deals to find the most suitable mortgage rates for your specific situation.

Predicting Interest Rates: Will They Rise or Fall?


The direction of interest rates in the future is uncertain. Experts say the base rate may drop to 3% by the end of 2026. Mortgage rates in the UK have decreased since the highs witnessed after the 2022 Autumn mini-budget. However, individual mortgage rates have varied depending on changes in the base rate.

To combat rising inflation, the Bank of England has implemented 13 consecutive increases to the base rate. The most recent increase occurred on 22 June 2023, increasing the rate to 5%. The Bank of England's Monetary Policy Committee has scheduled its announcement regarding the base rate on 3 August 2023.

How High Could Interest Rates Go?

The highest recorded base rate was 17% back in 1979. It is not currently predicted to reach those levels anytime soon. Analysts expect the base rate to reach around 6% by the end of 2023. Keeping up with current mortgage news is helpful.

Increasing the base rate does not necessarily mean that all mortgage rates will also rise. Tracker mortgages are directly linked to the base rate and will be affected by fluctuations. On the other hand, fixed-rate mortgages have actually decreased since November 2022, despite several base rate increases.

The initial rate surge occurred due to economic turbulence following the September 2022 mini-budget. As economic conditions stabilised, lenders began reducing rates once again.

Will Interest Rates Decrease in the Future?

Will Interest Rates Decrease in the Future?

The long-term outlook suggests that most economists expect interest rates to decrease. This projection is based on the anticipated decrease in inflation, which the Bank of England aims to manage through its base rate. The central bank predicts that inflation will halve by the end of 2023 and fall below the target rate of 2% by 2026. However, cautionary notes have been sounded, suggesting that inflation in wages and daily costs may take longer to subside than it took to emerge, potentially causing inflation to persist.

International Monetary Fund (IMF) stated that the current high mortgage interest rates UK would likely be temporary and reduced when inflation is under control. The IMF also mentioned that interest rates for advanced economies should return to pre-pandemic levels, considering factors such as an ageing population and its impact on economic demand. However, the IMF suggests interest rates may not reach the record lows seen in the 2010s when rates consistently stayed below 1%.

Another significant reason for the potential decline in interest rates is the economic impact. Higher interest rates can restrict economic activity, making borrowing costs more expensive and hindering business expansion. While some economists view entering a recession as a potential solution to the inflation crisis, policymakers argue that it would be too detrimental to living standards.

Are UK Property Prices Set to Decline?

Will property prices in the UK experience a decline? The past few years have witnessed a price surge fueled by solid demand. However, some experts anticipate that increasing mortgage costs may dampen the demand for homes, potentially decreasing house prices. According to the latest House Price Index by Zoopla (May 2023), the annual growth of UK house prices slowed to 3% from the previous month's 4.1%. 

However, there are signs of demand recovery, with increased new sales. While the rate of house price growth has slowed, a significant decline has yet to be observed. Whether prices will fall in 2023 depends on factors like inflation trends and the impact of mortgage rates on buyer demand.

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The Insider @ Houst

The Insider @ Houst

The Insider team provides up-to-date and relevant information on short-term rentals to help navigate the world of short lets. If you're interested in publishing your content, please get in touch with us at

The Insider @ Houst

The Insider @ Houst

The Insider team provides up-to-date and relevant information on short-term rentals to help navigate the world of short lets. If you're interested in publishing your content, please get in touch with us at