Current UK Mortgage Rates: What You Need to Know

If you're planning to buy a home, understanding the latest mortgage rates in the UK is crucial. Mortgage lenders frequently adjust their rates, and staying updated can help you secure the best deal. Here’s an overview of current trends and options:

What's Happening With Mortgage and Interest Rates?

As of December 19, the Bank of England’s Base Rate stands at 4.75%. Inflation in November rose to 2.6%, exceeding the BoE’s 2% target. This makes interest rates a key factor in borrowing costs, with homebuyers carefully evaluating affordability and stability.

Fixed-Rate Mortgages

Fixed-rate mortgages remain a popular choice for financial stability:

The average rate for a 2-year fixed mortgage is 5.05%, slightly down by 0.02% from last week and 0.22% lower than a year ago.

For a 5-year fixed mortgage, the average rate is 4.80%, down 0.01% weekly and 0.14% annually.

Lowest fixed-rate options include 4.20% for 2-year fixed and 4.07% for 5-year fixed.

Buyers With Small Deposits (5-10%)

For those with smaller deposits:

A 95% LTV 2-year fixed mortgage averages 5.67%, while a 5-year fixed averages 5.29%.

For a 90% LTV mortgage, the 2-year fixed rate is 5.46%, and the 5-year fixed rate is 5.03%. These rates have slightly decreased over the past week, offering some relief for buyers with smaller deposits.

When Could Mortgage Rates Drop?

Mortgage rates may hold steady at 4.75% for now, with reductions potentially starting in autumn 2025, possibly dropping to 4%. However, this depends on inflation and economic conditions.

Monthly Repayments Impact

For a first-time buyer property priced at £225,086, the average monthly repayment on an 85% LTV, five-year fixed mortgage is approximately £1,097. This is slightly higher than the £1,096 monthly repayment a year ago, when property prices averaged £219,984.

Borrowing Amounts and Affordability

How much you can borrow depends on an affordability assessment, including your income, outgoings, and credit history. Higher deposits result in better rates, while smaller deposits may lead to higher borrowing costs.