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 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. On 3 August, the Base Rate increased to 5.25%, from 5% in June.

 

Rightmove's mortgage expert Matt Smith says: “Mortgage rates have now fallen steadily for the seventh consecutive week. There is a widely held view that the Base Rate is now nearing its peak which led to a fall in swap rates falling towards the end of last week, and this could mean we see lenders make more significant mortgage rate cuts in the next few weeks. Swap rates have also responded reasonably positively to today’s unemployment figures and pay growth data.

“All eyes will now look to the upcoming inflation figures, which are likely to have an impact on the next Bank of England Base Rate decision on 21 September. As long as the news is in line with market expectations, it’s possible that rate reductions will start to gather pace, and we could see sub-5% rates return to the market for the first time since the end of June”, he adds.

 

The current average mortgage rate for a five-year fixed, 85% loan-to-value mortgage is 5.73%, unchanged from last week. The lowest rate for this type of mortgage is 5.24%.

When could mortgage rates start to drop?

 

Right now, the financial markets are predicting that the Base Rate may peak at around 5.75%, in early 2024. Once we’ve passed this peak, it’s thought interest rates will slowly start to come down – and we can expect mortgage rates to follow this pattern. 

We’ve seen mortgage rates edge down slowly in recent weeks, in response to the positive inflation figures. 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 inflation continuing to decrease, 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 £223,614. Based on that, the average monthly mortgage payment for a first-time buyer taking out an average five-year fixed, 85% LTV mortgage, is now £1,193 per month if repaying over 25 years, unchanged from last week.

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.

 

A good way to find out how much you could borrow is to use a mortgage calculator. And to get a personalised result by applying for a Mortgage in Principle which will take you one step closer to a mortgage offer.

 

Read more about the different types of mortgages and how to choose a mortgage term that meets your needs, both now and in the future.

 

"What are the current UK mortgage rates?" - by Rightmove