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, by Matt Stevens
Almost all loans have an interest rate, and mortgages are no exception. The interest rate of a mortgage is the percentage that’s charged on top of the amount you owe, which acts as a payment for using your chosen lender’s services.
When choosing your mortgage product and provider, it’s incredibly important that you look into all of the different interest rates available to you. This is because even the smallest difference can end up saving you thousands of pounds over the term of your loan.
To help you get the best deal, we’ve put together this guide to mortgage interest rates, which will cover:
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When choosing your mortgage product and provider, it’s incredibly important that you look into all of the...
What are the current interest rates for a mortgage in the UK?
According to data from Rightmove which is correct as of August 7 2024, the average interest rate on a 5 year fixed-rate mortgage is 4.69% and the average interest rate on a 2 year fixed-rate mortgage is 5.05%, with both being relative to 75% LTV.
The tables below contain data on deals for other LTV ratios while showing the week-on-week changes they've experienced.
Current average two-year fixed mortgage rates
Loan to value (LTV) | 31 July 2024 | 7 August 2024 | Weekly change |
60% LTV | 4.59% | 4.55% | -0.04% |
75% LTV | 5.08% | 5.05% | -0.03% |
85% LTV | 5.27% | 5.24% | -0.03% |
90% LTV | 5.58% | 5.59% | +0.01% |
95% LTV | 5.96% | 5.94% | -0.02% |
Current average five-year fixed mortgage rates
Loan to value (LTV) | 31 July 2024 | 7 August 2024 | Weekly change |
60% LTV | 4.19% | 4.14% | -0.05% |
75% LTV | 4.73% | 4.69% | -0.04% |
85% LTV | 4.91% | 4.88% | -0.03% |
90% LTV | 5.12% | 5.12% | -0.00% |
95% LTV | 5.48% | 5.50% | +0.02% |
What is a good mortgage rate?
A good mortgage rate varies depending on the type of mortgage and individual circumstances. The lowest rate isn’t always the best choice, as other factors play a role in determining the overall value of a mortgage product. To assess whether a rate is favourable, compare it to similar mortgage products in the market.
Keep in mind that mortgage rates fluctuate with changes in the base rate and economic conditions. Your personal financial situation also impacts what constitutes a ‘good’ rate. For instance, those with strong credit ratings or the ability to make a large deposit often have access to better rates.
What is the mortgage base rate?
The base rate is the interest rate set by the Bank of England for lending to banks. When you take out a mortgage, your lender borrows money from the Bank of England at this base rate and then passes the cost onto you. Therefore, the base rate directly affects the interest rate on your mortgage.
When the base rate rises, borrowing becomes more expensive, and saving becomes more attractive. Conversely, a lower base rate makes borrowing cheaper and saving less rewarding. These changes in the base rate influence overall economic activity, as people adjust their borrowing and saving habits, which in turn affects inflation. The Bank of England regularly adjusts the base rate to manage inflation.
The current base rate is 5%, but it is reviewed and can change monthly by the Bank of England’s Monetary Policy Committee.
Frequently Asked Questions
The base rate is the interest rate set by the Bank of England for lending to banks
The base rate is the interest rate set by the Bank of England for lending to banks
The base rate is the interest rate set by the Bank of England for lending to banks
The base rate is the interest rate set by the Bank of England for lending to banks
The base rate is the interest rate set by the Bank of England for lending to banks
The base rate is the interest rate set by the Bank of England for lending to banks
