What's next for UK mortgage rates? (2023)

The Bank of England raised interest rates to 4.50% from 4.25% in May. The 0.25 percentage point rise marked the 12th rise since December 2021, when the bank rate was just 0.1%. Placebank chargesIt is at its highest level since 2008 and puts further upward pressure on borrowing costs.

The bank's next interest rate decision will be announced on June 22, 2023.

Volatility and Uncertainty

Mortgage rates surged after September's mini-budget led to market uncertainty and sent the pound to record lows. At the time, major banks including NatWest, Barclays, Halifax and Virgin Money closed deals and brought them back to the market at higher prices.

Although mortgage costs have corrected since then, many lenders haveincrease transaction costsAs interest rates continue to climb relentlessly.

Average cost and optimal cost of popular quotes

According to our mortgage partners,Better.co.uk, the average cost of a two-year fixed-rate agreement is 4.77%. A three-year contract costs an average of 4.62%, while a typical five-year contract now costs 4.45%.

These costs compare with a high of more than 6.50% recorded in October 2022.

Better.co.uk said the most competitive offer was 3.98% for a two-year solution, 4.10% for a three-year period and 3.93% for a five-year period. The best 10-year fixed rate is 4.39%.

(Video) UK mortgage rates are forecast to fall again - 3.5% BY APRIL

Today's average two-year follow-up rate is 5.06%, while class-leading deals are priced at 4.65%.

The typical standard variable rate (SVR) for lenders today is 7.29%, according to Better.co.uk. A year ago, in May 2022, the average SVR was just 4.53%.

As of early May, there were 5,264 residential mortgage transactions on the market, according to Moneyfacts. The 4,372 since early last month is close to the 5,300 recorded in December 2021 before rates start to rise.

After last fall's mini-budget, the number of available mortgages plummeted to about 2,560.

Interest and Types of Mortgages

So what does rising interest rates mean for you?cost of mortgageso far?

Around 1.4 million homeowners (according to UK Finance) have variable rate arrangements such asBase Rate Tracker, your monthly payment increased almost immediately after the bank last raised interest rates to 4.50%.

For example, on a £200,000 loan over 25 years, the tracking fee rises from 4.75% to 5%, costs an extra £30 per month, and increases monthly repayments from £1,140 to £1,170.

(Video) How interest rate hike will affect mortgages

Those with a fixed-rate offer, where the rate is locked in, say for two years or five years, won't see any difference in their monthly payments. However, when the agreement expires, available staking agreements can be much more expensive.

You can calculate the monthly cost of your mortgage using our various interest ratesmortgage calculator.

House prices and stamp duty

The latest Halifax house price report showed annual house price inflation slowed to 0.1% in April from 1.6% in March. This means that the average UK house price (£286,896) is at a similar level to the same time last year.

Nationwide reported that prices fell 2.7% in the 12 months to April, but rose 0.5% month-on-month. It was the first monthly increase in more than six months and some commentators believe the market has stabilized.

This sentiment is reflected in the latest figures from Rightmove, which show that the value of properties listed on the market rose by 1.8% (£6,647) in May to a record high of £372,894. The month's gain was also higher than the historical average of about 1 percent in May, according to the real estate portal.

stamp duty cutAnnounced in last autumn's mini-budget, it raised the zero-interest band for property purchases from £125,000 to £250,000. This comes despite a major reversal of other tax breaks announced by former prime minister Liz Truss.

Why are interest rates rising?

The bank's MPC used rate hikes as a means to cool the economy and rein in rising inflation. Consumer Price Index (CPI)measure inflationThat fell to 8.7% in the 12 months to April, a sharper drop than many forecasters had expected, but still painfully high, largely due to rising costs for the food industry.

(Video) Fix your mortgage now or wait?

Inflation peaked at 11.1% in October, but has since fallen sharply. The government has set an inflation target of 2% for the Bank of England.

One of the main long-term drivers behind rising inflation is energy costs. From April 1, 2023energy price cap, set by regulator Ofgem, has been set at £3,280. Costs refer to the dual fuel household's annual bill, paid by direct debit based on typical consumption.

However, the government's own Energy Price Guarantee (EPG) applies, which is designed to protect households from skyrocketing energy costs. The EPG is currently set at £2,500 per annum.

But Ofgem announced today that the energy price cap will fall from £3,280 to £2,074 from 1 July. Price caps will reapply as they fall below EPG levels and will determine energy costs for households in England, Wales and Scotland until the end of September. From October 1, the new restrictions will come into effect.

What mortgage offers are there?

Tracking mortgage costs is challenging as bank rates rise, especially when rates change and deals can close on a daily basis.

An easy way is to use the mortgage form powered by Better.co.uk.

To find out what deals are available at today's rates for the type of mortgage you're looking for, you'll need to enter your personal criteria in the form below. Here's what you should do:

(Video) UK mortgage rates: What should you do?

  • Choose whether the mortgage is forfinancing home purchaseor if it isreturn carfor existing property
  • enterappropriate valueandmortgage amountyou need to. This will automatically generate a percentage called "Loan to Value". The lower your loan-to-value, the lower mortgage rates available
  • if you areBuy-to-let or interest-only mortgages(you'll need to have a payment strategy in place for these offers), or if you're looking for a mortgage to financeshared ownershipproperty
  • Finally, filter your search bymortgage typeFor example, you want a solution or tracker that is two or five years old. The filter is set to the full 25-year mortgage term, but you can change it if you want.

Here's a live chart of the mortgage deals available today.

What else do I need to know?

Mortgage deals that offer the lowest rates often come with fees. You can choose to pay it upfront or have it added to the loan. To calculate the cost of the fee, sort the results by "Original Period Cost" (in the "Sort By" drop-down menu).

Alternatively, you can sort the results by introductory rate, lowest rate or monthly payment, or even by the lender's "tracking" rate (the agreement will resume at the end of the term).

The cheapest are reserved for larger deposit amounts, usually 60% or more of the property value. And, in all cases, you will need sufficient income andclean credit historyMortgage is accepted.

If you want to find out what happens when your monthly mortgage payment overlaps with your household bill in different situations, ourmortgage calculatorIt will compress numbers.

When can I start remortgaging?

Once disbursed, mortgages tend to be good for six months, although some lenders, such as Skipton Building Society, accept offers of up to 12 months. If you want to remortgage your current home, this means you can lock in a rate today with no fees and no strings attached.


What is the next interest rate decision UK 2023? ›

The Bank of England's Monetary Policy Committee (MPC) sets monetary policy to meet the 2% inflation target, and in a way that helps to sustain growth and employment. At its meeting ending on 10 May 2023, the MPC voted by a majority of 7–2 to increase Bank Rate by 0.25 percentage points, to 4.5%.

What are predicted mortgage rates end of 2023 UK? ›

The market is pricing in further interest rate hikes in 2023, predicting that the Bank of England base rate will rise to almost 5% by August 2023 before slowly falling over the next five years to end up around 3.4%.

What will Bank of England base rate be in 2023? ›

On Thursday 11 May 2023, the Bank of England announced a 0.25% increase in its base rate from 4.25% to 4.50%.

Will mortgage rates go down 2024 UK? ›

What we do know is that the Bank of England expects inflation - the reason why interest rates are so high - to fall below its target rate of 2% and stay there from late-2024 onwards. Bank of England governor Andrew Bailey said the rate of price rises “is on course to halve by the end of this year”.

Will savings interest rates continue to rise in 2023 UK? ›

With inflation still running rampant at 10.7%, we'll likely see the base rate keep rising for a little while yet. But as inflation is forecast to drop back to below 1.4% by the end of 2024, the BoE is likely to start reducing the base rate in the coming years.

What will interest rates be in 2023 2024? ›

Direct Loan Interest Rates for 2023-2024
Loan Type10-Year Treasury Note High YieldFixed Interest Rate
Direct Subsidized Loans and Direct Unsubsidized Loans for Undergraduate Students3.448%5.50%
Direct Unsubsidized Loans for Graduate and Professional Students3.448%7.05%
1 more row
May 16, 2023

How high will mortgage rates go in 2024 UK? ›

Projected interest rates in 5 years in the UK
BoE4.4% in Q24.4% in Q2
ING4.5%4.5% in Q1; 3% in Q4

Will interest rates go down in September 2023? ›

After home financing costs nearly doubled in 2022, some relief is in sight for potential homebuyers in 2023. The interest rate for a 30-year fixed-rate mortgage in the U.S. is expected to drop to 5.25% by the end of this year, according to a forecast by the financial services website Bankrate.

What will UK interest rates be in 5 years? ›

After hitting a new high of 5%, UK interest rates are expected to fall sharply in the coming two years with rates possibly between 3.5% and 4% in 2024 before falling to between 3% and 3.5% in 2025. UK interest rates are expected to stabilise between 3.0% and 3.5% between 2025 and 2027.

How long will the Bank of England base rate stay high? ›

The Bank of England will cut the base rate to 3 per cent by the end of next year and then 2.5 per cent by the end of 2025, according to forecasts. That would be a substantial decline from the current 4.25 per cent but would still represent rates rising like a rocket and falling like a feather.

How high will UK interest rates go? ›

UK interest rates could potentially rise up to 4.75 per cent by the end of 2023, argues Costas Milas. This is because high public expectations of inflation have the potential of putting additional pressure on current inflation through demand for higher wages.

How high will mortgage rates go UK? ›

BoE forecasts predict that interest rates will peak at 4.75% at the end of 2023 before falling to around 3.5% by 2025. But while inflation remains high, there is the possibility of interest rates rising to counteract it and that could mean a 13th consecutive monthly rise might be on the cards in June.

Should I buy a house now or wait until 2023 UK? ›

For many, even a small slow down in house price growth will make getting on the ladder more affordable, making 2023 the year to buy. If you are thinking of making the leap to homeownership, it's worth getting in touch with a mortgage broker to find the best option for you.

What will UK interest rates be in 2026? ›

Their forecasts are based on financial market expectations, which see interest rates rising slightly to 4.3% by early 2024 and then falling back to 3.3% by 2026. These figures are highly significant.

What is the mortgage outlook for 2024? ›

These organizations predict that mortgage rates will decline through the first quarter of 2024. Fannie Mae, Mortgage Bankers Association and National Association of Realtors expect mortgage rates to drop through the first quarter of 2024, by half a percentage point to about nine-tenths of a percentage point.

Where can I get 7% interest on my money? ›

7% interest isn't something banks offer in the US, but one credit union, Landmark CU, pays 7.50% interest, though there are major requirements and stipulations. So, is it worth it?

Which bank gives 7% interest on savings account UK? ›

First Direct

Where will mortgage rates be in 5 years? ›

The predictions made by the various analysts and banks provide insight into what the financial markets anticipate for interest rates over the next few years. Based on recent data, Trading Economics predicts a rise to 5% in 2023 before falling back down to 4.25% in 2024 and 3.25% in 2025.

Where will interest rates be at the end of 2023? ›

Mortgage Rate Predictions For 2023

How wide is the gap? Fannie Mae sees the average rate of a 30-year fixed getting to 6.8% in 2023. Meanwhile, the prediction from Freddie Mac is 6.4%. The Mortgage Bankers Association is the real outlier, projecting the 30-year rate at 5.2% next year.

Where will interest rates be in 2025? ›

Beyond this year, the group expects mortgage rates to average 4.4% in both 2024 and 2025. Bank of America: Researchers at the investment bank expect mortgage rates to fall to 5.25% by the end of 2023.

How high could interest rates go in 2023? ›

With the next Federal Reserve meeting coming up on May 3, 2023, it's uncertain if the Fed will keep interest rates in a holding pattern through the spring. Both the Fed and experts are predicting another 0.25% rate hike for May.

How long will mortgage rates continue to rise UK? ›

The Bank of England base rate is expected to rise today, having a knock-on effect on mortgages. New research suggests inflation could remain above target levels for the next two years, keeping interest rates at relatively high levels and causing more woe for mortgage holders.

What are predicted mortgage rates in 2028 UK? ›

Home loan rates will rise steadily before peaking in the second half of 2024, according to the latest forecasts for the UK's economy. The Office for Budget Responsibility said Thursday that mortgage rates will then stay above 4.5% through the first quarter of 2028.

Will mortgage rates go down in October 2023? ›

“[W]ith the rate of inflation decelerating rates should gently decline over the course of 2023.” National Association of Realtors (NAR). “[F]orecasts that … mortgage rates will drop—with the 30-year fixed mortgage rate progressively falling to 6.0% this year and to 5.6% in 2024.”

How long will interest rates stay high? ›

An interest rate forecast by Trading Economics, as of 12 May, predicted that the Fed Funds Rate could hit 5.25% by the end of this quarter - a forecast that has been materialised. The rate is then predicted to fall back to 3.75% in 2024 and 3.25% in 2025, according to our econometric models.

How high will interest rates go in 2024? ›

The average interest rate for the benchmark 30-year fixed mortgage reached 7.08%, as of Monday. However, with the economy expected to cool and possibly dip into a recession, many recent forecasts expect rates to drop to 6% or below in 2024, including a Fannie Mae projection of 5.2%.

What will Bank of England interest rates be in 2024? ›

Furthermore, the Bank of England's forecast, assuming Bank Rate remains at its new 4% level, shows inflation falling to less than 1% in Q2 2024 and running at only 1.5% and 0.5% at the end of 2024 and 2025 respectively – all well below the Bank of England's 2% target.

How long will UK interest rates stay low? ›

The Bank's current projections state that interest rates will fall back to 3.6 per cent in 2025, declining further to 3.3 per cent in 2026. The IMF's latest modelling shows the UK's natural rate of interest could fall to about 0.3 per cent by 2050.

What could Bank of England base rate go to? ›

The Bank of England is likely to increase interest rates one more time in May, to 4.5%, before inflation falls “sharply” over the rest of the year, a former rate-setter has predicted.

What is the lowest Bank of England base rate ever? ›

The current Bank of England base rate is 4.5%.

The base rate has been rocketing over the past year or so. It dropped to an all time low of 0.1% in March 2020 to try and help the economy survive impact of coronavirus, and stayed there until November 2021. Then the rises began.

Will UK interest rates fall again? ›

Forecasts show interest rates may now peak in September at around 4.9% - before starting to slowly come down after that. Interest rates have risen at 11 consecutive meetings since December 2021 in a bid to keep a lid on price pressures in the economy.

Will house prices drop in 2023 UK? ›

Lloyds and Halifax expect house prices to fall 8% in 2023, while Nationwide and online estate agent Zoopla are predicting falls of 5%. But while the consensus is prices will fall this year, “it's a more nuanced picture”, says Myron Jobson, senior personal finance analyst at interactive investor.

Will 2024 be a good time to buy a home? ›

With mortgage rates declining faster than expected, home prices are likely to remain mostly flat throughout 2024. This will be good news for buyers who have been waiting on the sidelines for a good time to enter the market.

Why are UK house prices so high? ›

The consequence of this growing demand compared to limited growth in supply, is that there is strong economic pressure on house prices. UK Housing market has often seen demand increase at a faster rate than supply, causing price to rise.

How much has the average house price increase over the last 10 years in the UK? ›

House prices have soared over the past decade in the UK but some areas have seen much bigger gains than others... and one has even seen a fall. Official figures from the ONS show the average UK house prices rose from £167,716 in January 2013 to £290,000 at the end of January 2023 - a gain of 73 per cent.

Will UK mortgage rates go down? ›

Despite another hike expected in the UK, it has been predicted that interest rates will gradually return to pre-pandemic levels, which in turn would bring mortgage rates down.

What is the mortgage rate forecast for 2025? ›

30-Year Mortgage Rate forecast for May 2025. Maximum interest rate 4.56%, minimum 4.30%. The average for the month 4.43%. The 30-Year Mortgage Rate forecast at the end of the month 4.43%.

Are mortgage rates expected to drop in 2023? ›

And the Mortgage Bankers Association (MBA) is a bit more optimistic, forecasting that mortgage rates for 30-year fixed-rate mortgages will head downward in 2023 and end the year at about 5.2%.

What will a 30-year mortgage be in 2023? ›

As of May 24, 2023, the 30-year fixed mortgage rate is 7.45%, the FHA 30-year fixed rate is 7.31%, the VA 30-year fixed rate is 7.24% and the jumbo 30-year fixed rate is 6.27%.

What will interest rates be at end of 2023? ›

Current Refinance Rates for May 2023

30-year fixed: 7.23% 15-year fixed: 6.58% 30-year jumbo: 7.29%

What will be the peak interest rate in 2023? ›

Interest Rate Predictions for 2023

The central bank has kept the “terminal rate,” or the rate at which its benchmark fed funds rate will peak, at 5.1%. This is equivalent to a target range of 5%-5.25%, which has remained unchanged from the last estimate in December.

How high will interest rates be in 2023? ›

Meanwhile, Scotiabank predicted as of 28 April the US interest rates to stay at 5.25% for 2023, and fall to 3.5% in 2024. In the short-term, analysts believed that the Fed is likely to keep the current rate on hold for the near future, provided inflation doesn't spike again.

How high will interest rates rise in 2023? ›

With the next Federal Reserve meeting coming up on May 3, 2023, it's uncertain if the Fed will keep interest rates in a holding pattern through the spring. Both the Fed and experts are predicting another 0.25% rate hike for May.

Where will mortgage rates be in 2024? ›

These organizations predict that mortgage rates will decline through the first quarter of 2024. Fannie Mae, Mortgage Bankers Association and National Association of Realtors expect mortgage rates to drop through the first quarter of 2024, by half a percentage point to about nine-tenths of a percentage point.

Will interest rates come back down in 2023? ›

When it becomes more attractive to save money, consumers tend to spend less of it. But the Fed isn't done fighting inflation. And because of that, consumers should not expect interest rates to drop in 2023. However, rates may also not climb much from where they are today.

Will interest rates go down if there is a recession in 2023? ›

A slowing economy could lead to lower mortgage rates

The forecast reflects expectations of a slowing economy in 2023 as the Federal Reserve continues to increase its benchmark interest rate to combat high inflation.

How high will interest rates go UK? ›

Economists at UBS are also predicting a further interest rate rise in May, and are expecting inflation to average 6.5% in 2023 and 2.3% in 2024, before dropping to the Bank of England's 2% target by the end of 2025.


1. UK Housing Crisis Looms as Some Mortgage Rates Triple
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2. 0 1% Interest Rate What's Next for UK Mortgage Market?
3. Mortgage Rates UK // Understanding the UK Housing Market
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4. uk inflation report - WHAT NEXT FOR INTEREST RATES
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5. UK Base Interest Rate at 4.5% -Highest since 2008 (May 2023 increase)
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6. The Best UK Mortgage Rates Revealed
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