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Mortgage Rates in the UK: Understanding the Current Market Trends

Planning to purchase your next home? Along with looking out for investment hotspots, We at Property Store are always monitoring market trends so that we can keep you, our readers, up to date about the current property market trends. In this blog post, we will explore mortgage rates in the UK, and the factors affecting them. We will also take a peek at how they affect housing market behavior.

Miniature replica of a neighbourhood

What is a Mortgage?

If you are new to the property landscape, a mortgage is a loan specifically taken out to purchase a property, whether as an investment or as your next home. As with any other loans, the interest rate on a mortgage is the cost of borrowing the money and is one of the most important factors to consider when buying a property.

Skull on the ground

"The word mortgage is derived from a Law [Legal] French term used in Britain in the Middle Ages meaning 'death pledge'"

Source: Mortgage

The mortgage rate in the UK has a significant impact on the overall cost of buying a property. As such, the rates must be closely watched to ensure that each one of us can afford to keep a roof over our heads.

Factors Influencing Mortgage Rates in the UK

Several factors that influence mortgage rates in the UK. We have listed them out here for you so that in the future, you can have a good understanding of whether the rates will be rising or falling based on news and current events.

  • Competition

  • Bank of England Base Interest Rates

  • Economic Conditions


Competition in a capitalist market will yield better products at a lower price to attract consumers. The same goes for mortgage lenders. Competition between lenders plays a key role in determining mortgage rates. In a competitive market, lenders are bound to set lower rates to stand out among lenders. They may also offer special services to cater to your needs.

Bank of England Base Interest Rates

British currency

The Bank of England (BOE) sets the base interest rates, which is the benchmark for all other interest rates in the UK. This rate is used as a reference by mortgage lenders to set their mortgage rates. If the Bank of England raises its interest rate, mortgage rates are likely to rise, and vice versa. This is arguably the factor with the most impact on mortgage rates.

According to an article by Forbes, the current BOE rate is at its highest level since 2008. Associatively, mortgage rates are then at their highest since the recession! In turn, demand for mortgages is at its lowest since the economic lockdown of 2020 due to the pandemic.

Economic Condition

The economic conditions of the country, such as inflation and unemployment, can also impact mortgage rates. If the economy is performing well, mortgage rates are likely to be higher, as lenders can afford to offer higher rates. On the other hand, a poorly performing economy will yield lower mortgage rates as a way for lenders to attract customers.

As of writing this article, The Guardian reports that the "UK hit a fresh record high of 16.7% in the four weeks to 22 January". Similar to the BOE interest rates, this is the highest recorded inflation rate as of the recession of 2008.

Impact of Mortgage Rates on the Housing Market

Mortgage rates have a significant impact on the housing market. Low mortgage rates make it easier for people to afford to buy a property, which can lead to increased demand for properties and a rise in house prices. This was seen during the pandemic when the low mortgage rates and the stamp duty holiday led to increased demand for properties and caused prices in the housing market to spike.

Conversely, high mortgage rates can make it more difficult for people to afford to buy a property, which can lead to decreased demand for properties and a fall in house prices. This can have a knock-on effect on the economy, as fewer people buying properties can lead to decreased consumer spending, which can impact other industries.

Currently, the Bank of England is combating record high inflation by increasing rates, which in turn is increasing mortgage rates. According to Property Industry Eye, BOE is planning to set another record by increasing rates by 0.5% today, which will set the rates to 4%. Expect mortgage lenders to increase their rates as well. The good news is that property prices are slowing down due to the low demand. While nobody can predict the market, it may a good idea to hold off on purchasing property till the market calms down.

How to Get the Best Mortgage Rates in the UK

For property investors planning to make money in any market, fret not our dear reader as we have compiled ways to get the best mortgage deals below. You may also want to check out our blog about reducing risk in property investing before purchasing.

  • Shop around

  • Improve your credit score

  • Consider a fixed-rate mortgage

  • Consider a larger deposit

Shop Around

As discussed above, competition will get you better rates at lower prices. Do not accept the first mortgage offer you receive. Make sure to shop around and compare offers from multiple lenders to ensure that you are getting the best deal. Check out both traditional high-street banks as well as online lenders, as they may offer more competitive rates.

Improve Your Credit Score

Your credit score is one of the most important factors that lenders consider when deciding on a mortgage rate. The higher your credit score, the more likely you are to be offered a lower mortgage rate. To improve your credit score, make sure that you pay your bills on time, keep your credit card balances low, and avoid applying for too many loans or credit cards.

Consider a fixed-rate mortgage

If you are concerned about interest rates rising, consider a fixed-rate mortgage. With this type of mortgage, the interest rate stays the same for a set period, typically two to five years. This means that you can be sure that your monthly repayments will not increase, even if interest rates rise. However, some borrowers are gambling on possible rate cuts by BOE and as such, are availing tracker mortgages that may reduce their monthly payments if their prediction is correct. If that is within your risk appetite, you may consider this strategy as well.

Consider a Larger Deposit

This is a tried and tested method. The larger the deposit you have, the lower your monthly repayments will be. Your mortgage rate is likely to be lower as well since lenders will consider you to be a lower risk, as you have more equity in the property. Consider saving as much as possible for a deposit to ensure that you get the best mortgage rate.


Mortgage rates in the UK are currently at an all-time high, making it difficult for those looking to buy a property. As such, it is important to understand the factors that influence mortgage rates and how they impact the housing market so that you can make informed decisions. By shopping around, improving your credit score, considering a fixed-rate mortgage, and saving as much as possible for a deposit, you can ensure that you get the best mortgage rate possible. Whether you are a first-time buyer or an experienced property investor, understanding mortgage rates is essential to making the right decisions when it comes to buying a property in the UK.

How can Property Store help?

Property Store is a Property Management CRM Software designed by property investors for property investors. With Property Store's Investment Calculator, you will be able to stress test your deal through different mortgage rates so that you can be sure that you can afford your property even during recession.


What are you waiting for?! Check out Property Store CRM's pricing plans and sign up now and get your first week free!


Looking to start your property investment career? Check out our blog about the things we wished we knew when we first started so that you can learn from our mistakes!


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